Question
ROS Inc. is located in Switzerland. ROS, whose currency is the Swiss franc (SF), is wholly owned by CRO Ltd., a Canadian company with a
ROS Inc. is located in Switzerland. ROS, whose currency is the Swiss franc (SF), is wholly owned by CRO Ltd., a Canadian company with a functional and presentation currency of the Canadian dollar. ROS's functional currency is the SF. The summarized balance sheet for ROS at December 31, 2019, was as follows:
Monetary assets SF 100,000
Non-monetary assets 200,000
total assets SF 300,000
Monetary liabilities SF 190,000
Non-monetary liabilities 30,000
Shareholders' equity 80,000
total liablities and equity SF 300,000
None of the non-monetary assets or liabilities are reported at market value.
What is the exchange gain or loss in Canadian dollars for ROS on January 1, 2020, if the exchange rate changes from SF 1 = C$1.50 to SF 1 = C$1.52 and this is the only event affecting ROS for that day?
a.Foreign exchange gain of $1,600 which will be reflected in net income
b.Foreign exchange gain of $1,600 which will be reflected in Other Comprehensive Income.
c.Foreign exchange loss of $1,600 which will be reflected in Other Comprehensive Income.
Tober Ltd. made the following purchases in Brazilian reals (BRL) during 2019 and paid the amounts owed based on the following schedule: The functional currency of Tober is the CAD$.
Date Purchases (BRL) Payments (BRL) BRL1 =X CAD$
April 1, 2019 875,000 .548
April 15, 2019 450,000 .552
April 23, 2019 925,000 .591
April 30, 2019 380,000 .578
The Account Payable on the Balance Sheet as at April 30, 2019 would be:
a.$531,560 CAD
b.970,000 CAD
c.$560,660 CAD
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