On July 1, 20x9, Vir Company lent P120,000 to a foreign supplier, evidenced by an interest-bearing note

due on July 1, 20y0. The note is denominated in the currency of the borrower and was equivalent to 840,000

local currency units (LCU) on the loan date. The note principal was appropriately included at P140,000 in

the receivable section of Vir's December 31, 20x9 balance sheet. The note principal was repaid to Vir on

the July 1, 20y0 due date when the exchange rate was 8 LCU to P1. In its income statement for the year

ended, December 31, 20y0, what amount should Vir include as a foreign currency transaction gain or loss?

During July 20x9, Petron Corporation had the following transactions with foreign businesses:

Billing Exchange Rate

Date Nature of Transaction Currency (Direct)

Vendor A:

7/ 1/x9 Imported merchandise costing, 100,000 Rupees

from Pakistan wholesaler........................................................ Rupee P.82 7/10/x9 Paid 40% of amount owed.......................................................... .83 7/31/x9 Paid remaining amount owed..................................................... .78Customer A 7/15/x9 Sold merchandise for 50,000 Pounds to Syrian wholesaler.................................................................... Pound* P.95 7/20/x9 Received 20% payment............................................................... .90 7/30/x9 Received remaining amount owed........................................... .91 *Syrian pound.

1. What is the capitalized cost of inventory purchase from the Pakistan wholesaler?

a. P 0 c. P82,000

b. 78,000 d. 83,000

2. What is the foreign exchange gain or loss on July 10, 20x9 transactions arising from the Pakistan

wholesaler?

a. P1,000 loss c. P400 gain

b. P1,000 gain d. P400 loss

3. What is the foreign exchange gain or loss on July 31, 20x9 transactions arising from the Pakistan

wholesaler?

a. P4,000 gain c. P2,400 loss

b. P4,000 loss d. P2,400 gain

4. What is the reportable sales amount in the income statement in 20x9?

a. P38,000 c. P45,500

b. P45,000 d. P47,500

5. What is the foreign exchange gain or loss on July 20, 20x9 transactions arising from the Syrian wholesaler?

a. P500 gain c. P2,500 gain

b. P500 loss d. P2,500 loss

6. What is the foreign exchange gain or loss on July 30, 20x9 transactions arising from the Syrian wholesaler?

a. P1,600 loss c. P2,000 gain

b. P1,600 gain d. P2,000 loss