Question
Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of
Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 200 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 320,000. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows:
| Date | U.S. Dollar per Brazilian Real (BRL) | ||
| September 1, 2020 | $ | 0.230 | |
| December 1, 2020 | 0.220 | ||
| December 31, 2020 | 0.240 | ||
| March 1, 2021 | 0.225 | ||
- Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020?
- Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021?
- Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and in 2021?
(Input all amounts as positive values.)
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Intermediate Accounting IFRS
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
3rd edition
1119372933, 978-1119372936
