Question

In: Accounting

5) For each of the following situations, select the best answer concerning accounting for foreign currency...

5) For each of the following situations, select the best answer concerning accounting for foreign currency transactions:

(G) Results in a foreign exchange gain.

(L) Results in a foreign exchange loss.

(N) No foreign exchange gain or loss.

_____1. Export sale by a U.S. company denominated in dollars, foreign currency of buyer appreciates.

_____2. Export sale by a U.S. company denominated in foreign currency, foreign currency of buyer appreciates.

_____3. Import purchase by a U.S. company denominated in foreign currency, foreign currency of buyer appreciates. _____4. Import purchase by a U.S. company denominated in dollars, foreign currency of buyer appreciates.

_____5. Import purchase by a U.S. company denominated in foreign currency, foreign currency of buyer depreciates. _____6. Import purchase by a U.S. company denominated in dollars, foreign currency of buyer depreciates.

_____7. Export sale by a U.S. company denominated in dollars, foreign currency of buyer depreciates.

_____8. Export sale by a U.S. company denominated in foreign currency, foreign currency of buyer depreciates.

Solutions

Expert Solution

1. Export sale by a U.S. company denominated in dollars, foreign currency of buyer appreciates.--------- No foreign exchange gain or loss.

2. Export sale by a U.S. company denominated in foreign currency, foreign currency of buyer appreciates.----Results in a foreign exchange gain

3. Import purchase by a U.S. company denominated in foreign currency, foreign currency of buyer appreciates. -------Results in a foreign exchange loss

4. Import purchase by a U.S. company denominated in dollars, foreign currency of buyer appreciates.---- No foreign exchange gain or loss.

5. Import purchase by a U.S. company denominated in foreign currency, foreign currency of buyer depreciates. -------Results in a foreign exchange gain

6. Import purchase by a U.S. company denominated in dollars, foreign currency of buyer depreciates.---- No foreign exchange gain or loss.

7. Export sale by a U.S. company denominated in dollars, foreign currency of buyer depreciates.---------- No foreign exchange gain or loss.

8. Export sale by a U.S. company denominated in foreign currency, foreign currency of buyer depreciates.------Results in a foreign exchange loss


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