Analysis of Transactions Kramer Corporation purchased pollution control devices from a foreign company with the purchase price stated in FCU (foreign currency units). At the time Kramer Corporation signed the contract in the amount of 600,000 FCU for delivery of the equipment, the exchange rate was 6.0 FCU for $1. At the time the equipment was received by Kramer Corporation, the rate was 5.6 FCU for $1. At the time payment was made by Kramer Corporation, the rate had increased to 6.4 FCU per.$1.

a. At what amount should Kramer record the equipment?

b. In what way, if any, should Kramer account for the change in exchange rates between the signing of the contract and the delivery of the equipment?

c. In what way, if any, should Kramer account for the change in exchange rates between the date of delivery and payment?

d. Would Kramer have been wise to pay for the equipment at the time of delivery, or was it wise to wait? What dollar amount did the company gain or lose as a result of waiting?

e. In what ways might Kramer have eliminated the risk of currency fluctuations affecting the amount paid for the equipment? When should these actions have taken place?