Question
On July 1, year 1 Lassen Co, Issued a 300,000 euro purchase order for equipment to be supplied by a German company. Lassen's functional currency
On July 1, year 1 Lassen Co, Issued a 300,000 euro purchase order for equipment to be supplied by a German company. Lassen's functional currency in is US dollars. The equipment was delivered to Lassen on November 1, year 1, and Lassen recorded a payable due to the German company. Lassen paid for equipment on January 31, year 2. The following are the exchange rates in effect;
| July 1, year 1 | 1 euro = | 1.2 | US dollars |
| November 1, year 1 | 1 euro = | 1.25 | US dollars |
| December 31, year 1 | 1 euro = | 1.15 | US dollars |
| January 31, year 2 | 1 euro = | 1.1 | US dollars |
Under the US GAAP, what is the foreign currency gain or loss that Lassen should record for the year ended December 31, year 1?
| A) | A loss of $30,000 | |
| B) | A gain of $15,000 | |
| C) | A gain of $45,000 | |
| D) | A loss of $15,000 | |
| E) | A Gain of $30,000 | |
| F) | A loss of $45,000 |
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Mathematical Applications for the Management Life and Social Sciences
Authors: Ronald J. Harshbarger, James J. Reynolds
11th edition
978-1305108042
