Purchases Denominated in Foreign Currency Western Import Company purchased inventory items from a foreign company with the purchase price stated in FCU (foreign currency units). The inventory items were received on December 1, 2000, at an agreed-upon price of 250,000 FCU.

Payment is to be made on February 1, 2001. Western Import’s year-end is December 31, 2000. Relevant exchange rates are as follows:

a. What amount should Western Import record as the purchase price of the inventory items at December 1, 2000?

b. What amount should Western Import report as its accounts payable at December 31, 2000?

c. What amount of gain or loss on foreign currency transactions should Western Import record at December 31, 2000?

d. What dollar amount should Western Import report for its payment on February 1, 2001?

e. What amount of gain or loss on foreign currency transactions should Western Import record at February 1, 2001?

f. Was Western Import better off or worse off from having delayed payment on its account until February 1, 2001, rather than paying on December 1, 2000? By what amount?

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December 1, 2000 December 31, 2000 February 1, 2001 1 FCU $4.10 U.S. 1 FCU = => $3.82 U.S. IFCU = $4.07 U.S.