Amount in Transaction Type of Transaction Import purchase Import purchase Foreign Currency Settlement Date Foreign Currency Date Bazilian real (BRL) Chilean peso (CLP Sariss franc (CHF) Surss franc (CHF 5/10/2015 (130,000) (30,000,000) 1/10/2015 Export sale Import purchase 5/10/2015 4/10/2015 1/10/2015 4/10/2015 1/10/2015 4/10/2015 1/10/2015 (50,000) Euro Euro Chinese yuan (CNY) 4/10/2015 Export sale Import purchase 45,000 (300,000) 7/10/2015
Import/Export Company, a U.S. company, made a number of import purchases and export sales denominated in foreign currency in 2015. Information related to these transactions is summarized in the following table. The company made each purchase or sale on the date in the Transaction Date column and made payment in foreign currency or received payment on the date in the Settlement Date column.
Required
1. Create an electronic spreadsheet with the information from the preceding table. Label columns as follows:
Foreign Currency
Type of Transaction
Amount in Foreign Currency
Transaction Date
Exchange Rate at Transaction Date .
$ Value at Transaction Date
Settlement Date
Exchange Rate at Settlement Date
$ Value st Settlement Date
Foreign Exchange Gain (Loss)
2. Use historical exchange rate information available on the Internet at www.x-rates.com, Historic Lookup, to find the 2015 exchange rates between the U.S. dollar and each foreign currency on the relevant transaction and settlement dates.
3. Complete the electronic spreadsheet to determine the foreign exchange gain (loss) on each transaction. Determine the total net foreign exchange gain (loss) reported in Import/Export Company's 2015 income statement.
4. Explain why a foreign exchange gain arises for some transactions and a foreign exchange loss occurs for other transactions.
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