LooseLeaf for Advanced Accounting (Irwin Accounting) - Standalone book
13th Edition
ISBN: 9781259444951
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 24P
a.
To determine
Identify the effect of fluctuation in exchange rates on the 2017 B’s income statement.
b.
To determine
Identify the effect of fluctuation in exchange rates on 2018 B’s income statement.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
On December 20, 2017, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is received on January 10, 2018. Currency exchange rates for 1 ostra are as follows:
December 20, 2017 $1.05December 31, 2017 1.02January 10, 2018 0.98a. How does the fluctuation in exchange rates affect Butanta’s 2017 income statement?b. How does the fluctuation in exchange rates affect Butanta’s 2018 income statement?
On December 20, 2015, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign company at a price of 50,000 ostras. Payment received on January 10, 2016, Currency exchange rates for 1 ostra are as follows: December 20, 2015 $1.05, December 31, 2015 $1.02 and January 10, 2016 $0.98. How does the fluctuation in exchange rates affect Butanta's 2015 income statement? How does the fluctuation in exchange rates affect Butanta's 2016 income statement?
Turbo Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2017, for 100,000 markkas. It paid the foreign currency account payable on January 17, 2018. The following exchange rates for 1 markka are known:November 1, 2017 $0.754December 31, 2017 0.742 January 15, 2018 0.747a. How does the fluctuation in exchange rates affect Turbo’s 2017 income statement?b. How does the fluctuation in exchange rates affect Turbo’s 2018 income statement?
Chapter 9 Solutions
LooseLeaf for Advanced Accounting (Irwin Accounting) - Standalone book
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - What factors create a foreign exchange gain on a...Ch. 9 - In what way is the accounting for a foreign...Ch. 9 - Prob. 5QCh. 9 - How does a foreign currency option differ from a...Ch. 9 - Prob. 7QCh. 9 - Why would a company prefer a foreign currency...Ch. 9 - How do companies report foreign currency...Ch. 9 - How does a company determine the fair value of a...
Ch. 9 - What is hedge accounting?Ch. 9 - Prob. 12QCh. 9 - What are the differences in accounting for a...Ch. 9 - What are the differences in accounting for a...Ch. 9 - What are the differences in accounting for a...Ch. 9 - Prob. 16QCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Grace Co. had a Chinese yuan payable resulting...Ch. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Prob. 9PCh. 9 - Prob. 10PCh. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - On March 1, Pimlico Corporation (a U.S.-based...Ch. 9 - Torres Corporation (a U.S.-based company) expects...Ch. 9 - Prob. 15PCh. 9 - What was the net impact on Jensen Companys 2018...Ch. 9 - What was the net increase or decrease in cash flow...Ch. 9 - What is the net impact on Micros net income for...Ch. 9 - What is the net impact on Micros net income for...Ch. 9 - What is Micros net increase or decrease in cash...Ch. 9 - What is the net impact on Dos Santos Companys 2017...Ch. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - Prob. 27PCh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - Prob. 30PCh. 9 - Prob. 31PCh. 9 - Use the same facts as in Problem 31 except that...Ch. 9 - On June 1, Alexander Corporation sold goods to a...Ch. 9 - On June 1, Cairns Corporation purchased goods...Ch. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Prob. 38PCh. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Based on past experience, Leickner Company expects...Ch. 9 - Prob. 42PCh. 9 - RESEARCH CASEINTERNATIONAL FLAVORS AND FRAGRANCES...Ch. 9 - Prob. 2DYSCh. 9 - Prob. 3DYSCh. 9 - ANALYSIS CASECASH FLOW HEDGE On February 1, 2017,...Ch. 9 - Prob. 5DYSCh. 9 - COMMUNICATION CASEFORWARD CONTRACTS AND OPTIONS...
Knowledge Booster
Similar questions
- On December 20, 2017, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is received on January 10, 2018. Currency exchange rates for 1 ostra are as follows:a. How does the fluctuation in exchange rates affect Butanta’s 2017 income statement?b. How does the fluctuation in exchange rates affect Butanta’s 2018 income statement?arrow_forwardMNC Corp. (a U.S.-based company) sold parts to a South Korean customer on December 1, 2017, with payment of 10 million South Korean won to be received on March 31, 2018. The following exchange rates apply: Date Spot Rate Forward rate ( to march 31, 2018 ) December 1, 2017 $0.0035 $0.0034 December 31, 2017 0.0033 0.0032 March 31, 2018 0.0038 N/A MNC’s incremental borrowing rate is 12 percent. The present value factor for three months at an annual interest rate of 12 percent (1 percent per month) is 0.9706. Assuming that MNC entered into a forward contract to sell 10 million South Korean won on December 1, 2017, as a fair value hedge of a foreign currency receivable, what is the net impact on its net income in 2017 resulting from a fluctuation in the value of the won? Choose the correct.a. No impact on net income.b. $58.80 decrease in net income.c. $2,000 decrease in net income.d. $1,941.20 increase in net income.arrow_forwardMNC Corp. (a U.S.-based company) sold parts to a South Korean customer on December 1, 2017, with payment of 10 million South Korean won to be received on March 31, 2018. The following exchange rates apply: Date Spot Rate Forward rate ( to march 31, 2018 ) December 1, 2017 $0.0035 $0.0034 December 31, 2017 0.0033 0.0032 March 31, 2018 0.0038 N/A MNC’s incremental borrowing rate is 12 percent. The present value factor for three months at an annual interest rate of 12 percent (1 percent per month) is 0.9706. Assuming that MNC did not enter into a forward contract, how much foreign exchange gain or loss should it report on its 2017 income statement with regard to this transaction? Choose the correct.a. $5,000 gainb. $3,000 gainc. $2,000 lossd. $1,000 lossarrow_forward
- Turbo Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2017, for 100,000 markkas. It paid the foreign currency account payable on January 17, 2018. The following exchange rates for 1 markka are known:a. How does the fluctuation in exchange rates affect Turbo’s 2017 income statement?b. How does the fluctuation in exchange rates affect Turbo’s 2018 income statement?arrow_forwardOn December 20, 2020, Momeier Company (a U.S.-based company) sold parts to a foreign customer at a price of 45,000 rials. Payment is received on January 10, 2021. Currency exchange rates are as follows: Date U.S. Dollar per Rial December 20, 2020 $ 1.14 December 31, 2020 1.11 January 10, 2021 1.07 How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier’s 2020 income statement? How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier’s 2021 income statement?arrow_forwardOn December 20, 2020, Momeier Company (a U.S.-based company) sold parts to a foreign customer at a price of 175,000 rials. Payment is received on January 10, 2021. Currency exchange rates are as follows: Date U.S. Dollar per Rial December 20, 2020 $ 1.27 December 31, 2020 1.24 January 10, 2021 1.20 How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier’s 2020 income statement?arrow_forward
- On December 20, 2023, Momeier Company (a U.S.-based company) sold parts to a foreign customer at a price of 165,000 rials. Payment is received on January 10, 2024. Currency exchange rates are as follows: DateU.S. Dollar per RialDecember 20, 2023$ 1.26December 31, 20231.23January 10, 20241.19 Required: How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier's 2023 income statement? How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier's 2024 income statement? a. The rial receivable exchange b. The rial receivable exchange S in U.S. dollar value, resulting in a foreign of in 2023. in U.S. dollar value, resulting in a foreign of in 2024.arrow_forwardRabato Corporation acquired merchandise on account from foreign supplier on November 1, 2015, for 60,000 LCU (local currency units). It paid the foreign currency account payable on January 15, 2016. The following exchange rates for 1 LCU are known: December 1, 2015 $0.345, December 31, 2015 $0.333 and January 1, 2016 $0.359. How does the fluctuation in exchange rates affect Rabato's 2015 income statement? How does the fluctuation in exchange rates affect Rabato's 2016 income statement?arrow_forwardOn November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 180,000 FCUS with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 180,000 FCUS. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply: Forward Rate Spot Rate $0.29 Date (to April 30, 2018) $ 0.28 November 1, 2017 December 31, 2017 April 30, 2018 0.27 0.25 0.26 N/A Bernard's incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610. a. Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. b. What is the impact on net income in 2017? C. What is the impact on net income in 2018? Complete this question by entering your answers in the tabs below. Req A Req B and C Prepare all…arrow_forward
- On December 20, 2023, Momeler Company (a U.S.-based company) sold parts to a foreign customer at a price of 195,000 rials. Payment is received on January 10, 2024. Currency exchange rates are as follows: Date December 20, 2023 December 31, 2023 January 10, 2024 U.S. Dollar per Rial. a. The rial receivable exchange b. The nial receivable exchange $1.29 1.26 1.22 Required: a. How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeler's 2023 income statement? b. How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier's 2024 income statement? in U.S. dollar value, resulting in a foreign of in 2023 in U.S. dollar value, resulting in a foreign of in 2024arrow_forwardOn July 1, 2020, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2021. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows: LO 9-2 LO 9-2 LO 9-2 LO 9-2, 9-3 Problems 1. Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses? LO 9-1 Type of Transaction Foreign Currency Foreign Exchange Gain or Loss a. Export sale Appreciates Loss b. Import purchase Appreciates Gain c. Import purchase Depreciates Gain d. Export sale Depreciates Gain Date Amount July 1, 2020 (date borrowed). . . . . . . . . . . . . . . . . . . . . . . . . $225,000 December 31, 2020 (Mifflin’s year-end). . . . . . . . . . . . . . . . 220,000 July 1, 2021 (date repaid). . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,000 In its 2021 income statement, what amount should Mifflin include as a…arrow_forwardHonesty Company sold goods on account to a foreign company for 80,200 euros on October 20, 2022. The date of invoice is October 25, 2022 and the payment is due on January 29, 2023. Exchange rates were as follows (see image below). Answer the following subquestion(3): a. How much is the foreign exchange gain (loss) to be reported in 2022? ____________ thanks!arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Fundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Fundamentals Of Financial Management, Concise Edi...
Finance
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning