1. On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below:

Transaction date: July 1, 2020:	1 U.S. Dollar = CDN$1.370
Year end: July 31, 2020:	1 U.S. Dollar = CDN$1.345
Settlement date: August 31, 2020:	1 U.S. Dollar = CDN$1.325

What was the amount in Canadian dollars paid by CANCO to RNB on the settlement date?

a. CDN$15,900

b. CDN$12,000

c. CDN$16,140

2. A derivative financial instrument can be used to hedge all of the following except a(n):

a. monetary asset.

b. commitment.

c. non-monetary asset.

3. Which of the following factors will affect the spread between spot and forward rates?

a. The length of time for the forward contract.

b. The current cross rate between two currencies.

c. The currency denominated as the domestic currency.

4. According to IFRS 9, which of the following statements pertaining to a forward contract is true?

a. A forward contract is valued at fair value throughout its life with any gains or losses to be deferred and amortized as they occur.

b. A forward contract is remeasured at fair value throughout its life, with any gains or losses reflected in net income as they occur.

c. A forward contract is valued using spot rates throughout its life with any gains or losses to be deferred and amortized as they occur.

5. On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below:

Transaction date: July 1, 2020:	1 U.S. Dollar = CDN$1.370
Year end: July 31, 2020:	1 U.S. Dollar = CDN$1.345
Settlement date: August 31, 2020:	1 U.S. Dollar = CDN$1.325

What would be the amount of the foreign exchange gain or loss recorded at the settlement date?

a. Nil. Any exchange gain or loss is deferred until settlement.

b. A CDN$240 exchange gain.

c. A CDN$300 exchange loss.

6. XYZ Corp. has a calendar year end. On January 1, 2019, the company borrowed $5,000,000 U.S. dollars from an American Bank. The loan is to be repaid on December 31, 2022 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in U.S. dollars. XYZ does not hedge to minimize its foreign exchange risk. The following exchange rates were in effect throughout the term of the loan:

January 1, 2019	US $1 = CDN $1.1500
December 31, 2019	US $1 = CDN $1.1490
December 31, 2020	US $1 = CDN $1.1485
December 31, 2021	US $1 = CDN $1.1483
December 31, 2022	US $1 = CDN $1.1487

The average rates in effect for 2019 and 2020 were as follows:

2019:	US $1 = CDN $1.1493
2020:	US $1 = CDN $1.1487

What is the amount of interest expense (in Canadian Dollars) recorded for 2019?

a. $372,500

b. $287,325

c. $250,000