Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Multiple Cholce L Select the best answer for cach of the following EXERCISE 12-5 A sale of goods by a U.S. company was denominated in

image text in transcribed
image text in transcribed
Multiple Cholce L Select the best answer for cach of the following EXERCISE 12-5 A sale of goods by a U.S. company was denominated in a foreign currency. The sale resulted in a receivable that was fixed in terms of the amount of foreign currency that would be received. Exchange rates between the dollar and the curreney in which the transaction was denominated changed so that a loss was incurred. This loss should be included as a(n) 1. (a) Extraordinary item in the income statement. (b) Component of income from continuing operations (e) Separate component of stockholders' equity (d) Deferred item in the balance sheet On September 1, 2014, Change Corp. received an order for equipment from a foreign customer for 300,000 units of foreign currency when the U.S. dollar equivalent was $96,000. Change shipped the equipment on October 15, 2014, and billed the customer for 300,000 units of foreign currency when the U.S. dollar equiv- alent was $110,000. Change received the customer's remittance in full on November 16, 2014, and sold the 300,000 foreign curency units for $105,000. In its income statement for the year ended December 31, 2014, Change should report a foreign exchange loss of 2. (a) $9,000 (b) $5,000 (c) $14,000 (d) S-0 3. McNeil, a US. corporation, bought inventory items from a supplier in Denmark on November 5, 2014, for 100,000 krones, when the spot rate was S.4395. At McNeil's December 31, 2014, year-end, the spot rate was $.4345. On January 15, 2015, McNeil bought 100,000 krones at the spot rate of $.4445 and paid the invoice. How much should McNeil report in its income statement for 2014 and 2015 as transaction gain or loss? 2014 2015 (a) 5-0- (b) $500 loss (c) $500 loss (d) $500 gain $ 500 loss $-0- $1,000 gain $1,000 loss 4. During 2014 u US. firn sold inventory to foreign customer. The transaction was denominated in the local (d) S-0 3. McNeil, a U.S.corporation, bought inventory items from a supplier in Denmark on November 5, 2014, for 100,000 krones, when the spot rate was $.4395. At McNeil's December 31, 2014, year-end, the spot rate was S.4345. On January 15, 2015, McNeil bought 100,000 krones at the spot rate of S.4445 and paid the invoice. How much should McNeil report in its income statement for 2014 and 2015 as transaction gain or loss? 2014 2015 $ 500 loss (a) S-0- (b) $500 loss (c) $500 loss (d) $500 gain $1,000 gain S1,000 loss 4. During 2014 a U.S. firm sold inventory to a foreign customer. The transaction was denominated in the local currency of the buyer. The direct exchange rate decreased from the date of the transaction to the end of the fiscal period; the rate increased from the end of the fiscal year to the date the account was settled in 2015. A transaction gain or loss should be recognized 2014 2015 (a) Loss (b) Gain Loss Loss Loss Gain Gain (c) (d) Gain (AICPA adapted)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Auditors Guide To Auditing Financial Statements In The UK

Authors: Steve Collings

1st Edition

1526527480, 978-1526527486

More Books

Students also viewed these Accounting questions

Question

Develop successful mentoring programs. page 400

Answered: 1 week ago