Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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

Financial Accounting Theory And Analysis Text And Cases

Authors: Richard G. Schroeder, Myrtle W. Clark, Jack M. Cathey

14th Edition

1119881226, 978-1119881223

More Books

Students also viewed these Accounting questions

Question

8.7 Evaluate at least five traditional training techniques.

Answered: 1 week ago

Question

8.5 Identify the five-step training process.

Answered: 1 week ago