Foreign Currency Fluctuations and Revenue Boeing Corporation has considerable non-U.S. operations. The table below shows Boeing’s 2015 revenue by geographic segment along with related exchange rates at the beginning and end of the year. The exchange rates represent the foreign currency equivalent of $1.

Year ended December 31, 2015 ($ millions) Revenue USD exchange rate 01/01/15 12/31/15 Asia, other than China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,433 0.7543 0.7063 Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,248 0.8266 0.9203 China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,556 6.2025 6.4952 Middle East. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,846 3.6729 3.6729 Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,601 3.5046 4.3044 Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,870 1.1618 1.3847 Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,398 11.5642 15.5159 Latin America and Caribbean. . . . . . . . . . . . . . . . . . . . . . . . . 1,875 14.7414 17.2494 Total non-U.S. revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,827 United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,287 Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $96,114 Required

a. Most of Boeing’s contracts are denominated in $US. Assume instead that Boeing wrote contracts for its international customers in their respective domestic currencies. For simplicity, assume the contracts were written on January 2, 2015, and revenue was collected and recognized on December 31, 2015. Use the exchange rate information in the table to calculate the effect on Boeing’s 2015 revenue if contracts had been denominated in the various foreign currencies.

b. How would the foreign exchange gain or loss that was computed affect net income?

c. How could Boeing treat such a foreign exchange gain or loss in any non-GAAP disclosures the company might make?

d. How should we, as analysts, treat such a foreign exchange gain or loss?