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On November 15, 2023, when the spot rate is $0.14/HK$, a U.S. company takes delivery of merchandise priced at HK$1,000,000 from a supplier in Hong
On November 15, 2023, when the spot rate is $0.14/HK$, a U.S. company takes delivery of merchandise priced at HK$1,000,000 from a supplier in Hong Kong. The spot rate is $0.135 on December 31, the companys year-end. Payment of HK$1,000,000 is made to the supplier on February 1, 2024, when the spot rate is $0.132. What is the effect of exchange gains and losses on 2023 and 2024 income?
Select one:
a.
| 2023 | 2024 |
|---|---|
| $5,000 exchange gain | $3,000 exchange gain |
b.
| 2023 | 2024 |
|---|---|
| No effect | $8,000 exchange loss |
c.
| 2023 | 2024 |
|---|---|
| No effect | $8,000 exchange gain |
d.
| 2023 | 2024 |
|---|---|
| $5,000 exchange loss | $3,000 exchange loss |
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