25 - How are the positive exchange differences that occur when the collection of export prices is realized in the period after the current period, into which account? A) To the receivables of 646 Foreign Exchange Profit Accounts B) 760 Marketing Sales Distribution Expenses C) To the debt of 656 Foreign Exchange Losses Account D) To the debt of the 612 Other Discounts Account E) To the receivables of 601 International Sales Account

25 - How are the positive exchange differences that occur when the collection of export prices is realized in the period after the current period, into which account? A) To the receivables of 646 Foreign Exchange Profit Accounts B) 760 Marketing Sales Distribution Expenses C) To the debt of 656 Foreign Exchange Losses Account D) To the debt of the 612 Other Discounts Account E) To the receivables of 601 International Sales Account

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter10: Measuring Exposure To Exchange Rate Fluctuations

Section: Chapter Questions

Problem 17QA

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25 - How are the positive exchange differences that occur when the collection of export prices is realized in the period after the current period, into which account?A) To the receivables of 646 Foreign Exchange Profit AccountB) 760 Marketing Sales Distribution ExpensesC) To the debt of 656 Foreign Exchange Losses AccountD) To the debt of the 612 Other Discounts AccountE) To the receivables of 601 International Sales Account
11 - In export transactions, the export price collected in advance from foreign buyers is recorded into which account (in foreign currency)?A) Receivable / To Account Advances GivenB) Bank Account / ReceivableC) Advances Received Account / ReceivableD) Advances Given Account / DebtE) Other Advances Received Account / Debt
25 - The registered value of foreign currency holdings is increased or reduced to the value of the balance sheet day based on the exchange rate at the end of the period. What is this process called?A) EqualizationB) FixingC) IncreaseD) Don't payE) Valuation
23 - Our business, 27.06.202. On the date of purchase, $14,000 was exchanged at the exchange rate of $1 = 6.95. Which of the following calculations is correct in this situation? a) 646 Exchange Profits Hs. 97,300 TL (Creditor) B) 646 Exchange Profits Hs. 4.900 TL (Borrower) NS) 646 Exchange Profits Hs. 4.900 TL (Creditor) D) 656 Foreign Exchange Losses Hs. 4.900 TL (Creditor) TO) 656 Foreign Exchange Losses Hs. 4.900 TL (Borrower)
31. How should exchange gains or losses resulting from foreign currency transactions be accounted for?a. Included as component of income from continuing operations for the period in which the ratechanges.b. Included as component of other comprehensive income for the period in which the rate changes.c. Included in the statement of financial position as a deferred item.d. Included in net earnings for gains, but deferred for losses. 32. When the information about two entities engaged in the same industry has been prepared and presented in similarmanner, the information exhibits the enhancing qualitative characteristics ofa. Relevanceb. Consistencyc. Faithful representationd. Comparability 33. What are the attributes that make the information provided in the financial statements useful to the readers?a. Qualitative characteristics of financial informationb. Quantitative characteristics of financial informationc. Elements of financial statementsd. Objectives of financial reporting 34.…
24 - How are the total values received or to be received in return for goods and services sold abroad, to which account?A) Other Discounts Account / DebtB) Foreign Sales Account / ReceivableC) To / Credit to Gross Sales AccountD) Other Sales To Be AccountedE) Domestic Sales Account / Receivable
1-Assume that our subsidiary’s income statement in Euros (€) is reported as follows for the year: Income statement: In Euros (€) Sales 2,500,000 Cost of goods sold (1,600,000) Gross Profit 900,000 Operating expenses (540,000) Net income 360,000 Also assume the following exchange rates: $ / € BOY Rate $1.30 EOY rate $1.40 Avg. rate $1.35 Required: Translate the income statement into $US using the current-rate method.
20 - If the exchange rates have risen, the value of the (forward) checks and debt securities will increase. To which account is this increase in value recorded?A) 656. Foreign Exchange Losses accountB) 100. Cash accountC) 646. Foreign Exchange Profits accountD) 950. Currencies in the Safe Deposit AccountE) 612. Other Discounts account
6. Assume that the United Arab Emirates has the following import/export volumes and prices. Itundertakes a major "devaluation" of the UAE Dirham (AED) by 6% on average against all majortrading partner currencies. What is the pre-devaluation and post-devaluation trade balance?
On November 30, P Corporation purchased inventory from a Chinese supplier. The Chinese company requires payment to be made in Yuan. What exchange rate should be used to value the account payable on the balance sheet? a_ Weighted average exchange rate for the year. B) Exchange rate at the end of the year C) Exchange rate on the settlement date D) Exchange rate on the date of purchase.
4) Brief, Inc., had a receivable from a foreign customer that is payable in the customer’s local currency. On December 31, 2020, Brief correctly included this receivable for 200,000 local currency units (LCU) in its balance sheet at $110,000. When Brief collected the receivable on February 15, 2021, the U.S. dollar equivalent was $120,000. In Brief’s 2021 consolidated income statement, how much should it report as a foreign exchange gain? a) $–0– b)$10,000 c) $15,000 d) $25,000
A foreign operation has the following local inflation rates: Year 1: 10% Year 2: 20% Year 3: 30% Year 4: 10% Year 5: 15% a. What is the applicable cumulative inflation rate that should be used for reporting as of end of year 5? b. What method will be used for remeasurement or translation of the foreign operation’s foreign currency financial statements? ANSWER A AND B BOTH PLEASE 2. XYZ, a US company has a subsidiary in Korea. The Korean sub sells inventory to a Japanese company with the sale denominated in US dollars. Between the date of sale and the date, the receivable is collected the Korean won strengthens 10% against the US dollar. Explain if there is a foreign exchange gain or loss or no FX impact and why? Answer 1 and 2 all