Question
On December 1, 20X1, Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1,
On December 1, 20X1, Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1, 20X2 to pay. On December 1, 20X1, Pimlico paid $500 for a put option to sell rupees at a strike price of $2.30 per 100 rupees on March 1, 20X2, which was the spot rate on December 1, 20X1. On December 31, 2001, the spot rate was $2.80 per 100 rupees and the option premium was $0.004 per 100 rupees.
If the spot rate on March 1, 20X2, was $2.45 per 100 rupees, what is the foreign currency exchange gain or loss that should be recorded that day?
A) $15,000 gain
B) $15,000 loss
C) $35,000 gain
D) $35,000 loss
(course : international accounting)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started