On May 20, 2019, when the spot rate is $1.08/€, a U.S. company buys merchandise from a supplier in Italy, at a cost of €100,000. The spot rate is $1.05/€ on June 30, the company’s year‑end. Payment of €100,000 is made on July 30, 2019, when the spot rate is $1.12/€. What is the effect on fiscal 2019 and fiscal 2020 income? Fiscal 2019 Fiscal 2020 a. No effect $4,000 exchange loss b. $3,000 exchange loss $7,000 exchange gain c. No effect $4,000 exchange gain d. $3,000 exchange gain $7,000 exchange loss
On May 20, 2019, when the spot rate is $1.08/€, a U.S. company buys merchandise from a supplier in Italy, at a cost of €100,000. The spot rate is $1.05/€ on June 30, the company’s year‑end. Payment of €100,000 is made on July 30, 2019, when the spot rate is $1.12/€. What is the effect on fiscal 2019 and fiscal 2020 income? Fiscal 2019 Fiscal 2020 a. No effect $4,000 exchange loss b. $3,000 exchange loss $7,000 exchange gain c. No effect $4,000 exchange gain d. $3,000 exchange gain $7,000 exchange loss
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 1MC: The balance in Ashwood Companys accounts payable account at December 31, 2019, was 1,200,000 before...
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1. On May 20, 2019, when the spot rate is $1.08/€, a U.S. company buys merchandise from a supplier in Italy, | ||||||
at a cost of €100,000. The spot rate is $1.05/€ on June 30, the company’s year‑end. Payment of €100,000 | ||||||
is made on July 30, 2019, when the spot rate is $1.12/€. What is the effect on fiscal 2019 and fiscal 2020 | ||||||
income? | ||||||
Fiscal 2019 Fiscal 2020 | ||||||
a. No effect $4,000 exchange loss | ||||||
b. $3,000 exchange loss $7,000 exchange gain | ||||||
c. No effect $4,000 exchange gain | ||||||
d. $3,000 exchange gain $7,000 exchange loss |
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