Chapter 19Problem I

1. Indirect Exchange RatesPhilippine Viewpoint:1 $ = P40; 1 Peso = $0.025 ($1/P40)1 Singapore dollar = P32.00; 1 Peso = 0.03125 Singapore (1 Singapore Dollar/P32)

2. FCU = Peso = P8,000 = $200; orDirect Exchange Rate P40.00= P8,000 x $1/P40 = $200

3. 4,000 Singapore dollars x P32 = P128,000Problem II

a. Exchange rates:Arrival Date Departure Date

DirectExchange Rate

1 Singapore dollar = P33.00(P33,000 / 1,000 Singaporedollars)

1 Singapore Dollar = P32.50(P3,250 / 100 Singaporedollars)

IndirectExchange Rate

P1.00 = .03 Singapore dollars(1,000 Singapore dollars /P33,000)

P1.00 = .03 Singapore dollars(100 Singapore dollars /P3,250))

2. The direct exchange rate has decreased. This means that the peso hasstrengthened during Mr. Alt's visit. For example, upon arrival, Mr. Alt had to pay P33per each dollar. Upon departure, however, each dollar is worth just P32.50. Thismeans that the relative value of the peso has increased or, alternatively, the valueof the dollar has decreased.

3. The Philippine peso equivalent values for the 100 Singapore dollars are:Arrival date

100 dollars x P33.00 = P3,300Departure date

100 dollars x P32.50 = 3,250Foreign Currency Transaction Loss P 50Mr. Alt held dollars for a time in which the dollars was weakening against the peso.Thus, Mr. Alt experienced a loss by holding the weaker currency.

Problem III1. If the direct exchange rate increases, the peso weakens relative to the foreign

currency unit. If the indirect exchange rate increases, the peso strengthens relative tothe foreign currency unit.

2.Settlement Direct Exchange Rate Indirect Exchange Rate

Transaction Currency Increases Decreases Increases DecreasesImporting Peso NA NA NA NAImporting LCU L G G LExporting Peso NA NA NA NAExporting LCU G L L G

Problem IV1.

December 1, 20x4 (Transaction date):Purchases.. 973,200

Accounts payable ($24,000 x P40.55) 973,200

December 31, 20x4 (Balance sheet date):Foreign currency transaction loss... 6,000

Accounts payable [$24,000 x (P40.80 P40.55)] 6,000

Accounts payable valued at 12/31 Balance Sheet($24,000 x P40.80) P979,200

Accounts payable valued at 12/1 Date of Transaction($24,000 x P40.55) 973,200

Adjustment to accounts payable needed.. P 6,000

March 1, 20x5 (Settlement date):Accounts payable 979,200

Foreign currency transaction gain [$24,000 x (P40.80 P40.65)] 3,600Cash ($24,000 x P40.65). 975,600

2.a.a.1. None transaction date (December 1, 20x4)a.2. P6,000 lossa.3. P3,600 gain (March 1, 20x5)

b.b.1. P979,200 spot rate on the balance sheet date or current rate on the balance sheetb.2. P973,200 spot rate on the transaction date or historical rate on the balance sheet

date.Problem V1. December 1, 20x4 (Transaction date):

Accounts receivable ($60,000 x P40.00) 2,400,000Sales 2,400,000

December 31, 20x4 (Balance sheet date):Accounts receivable.. 42,000

Foreign currency transaction gain [$60,000 x (P40.70 P40.00)] 42,000

Accounts receivable valued at 12/31 Balance Sheet($60,000 x P40.70) P2,442,000

Accounts receivable valued at 12/1 Date of Transaction($60,000 x P40.00) 2,400,000

Adjustment to accounts receivable needed.. P 42,000

March 1, 20x5 (Settlement date):Cash ($60,000 x P40,60).. 2,436,000Foreign currency transaction loss 6,000

Accounts receivable ($60,000 x P40.70). 2,442,000

2.a.a.1. None transaction datea.2. P42,000 gaina.3. P6,000 loss (March 1, 20x5)

b.b.1. P2,442,000 spot rate on the balance sheet date or current rate on the balance sheetb.2. P973,200 spot rate on the transaction date or historical rate on the balance sheet

date.Problem VIThe entries to record these transactions and the effects of changes in exchange rates areas follows:November 1, 20x4 (Transaction date):Equity investment (FVTPL)/Financial Asset 3,840,000

Cash 3,840,000To record the purchase of shares in Pineapple Computers at a cost of$96,000 at the exchange rate of P40.

December 10, 20x4 (Transaction date):Equipment 636,000

Cash 636,000To record the purchase of equipment costing 12,000 euros at theexchange rate of P53.

December 31, 20x4 (Balance sheet date):Equity investment (FVTPL)/Financial Asset 1,020,000

Unrealized gain in fair value of equity investment (financial asset) 1,020,000To record gain in fair value of Pineapple Computers share.

12/31/x4: Revalued Investment and translated at the rate onthe date of revaluation (closing/current rate):

(1,200 units x $100 x P40.50). P4,860,00011/1/x4: Investment, cost (1,200 units x $80 x P40.00) 3,840,000Unrealized gain on equity investment P1,020,000Less: Foreign currency transaction gain equity investment

11/1/20x4: Date of transaction (1,200 units x $80 x P40).. P3,840,000Less: 12/31/20x4: B/S Date (1,200 units x $80 x P40.50). 3,888,000 48,000

Other unrealized gain in the fair value of equity investment... P 972,000

Foreign currency transaction loss... 19,200Accounts payable [$96,000 x (P53.20 P53)] 19,200

To record exchange loss on accounts payable in euros.

Accounts payable valued at 12/31 Balance Sheet(1,200 x $80 x P53.20) 5,107,200

Accounts payable valued at 12/1 Date of Transaction(1,200 x $80 x P53.00) 5,088,000

Adjustment to accounts payable needed.. P 19,200

February 3, 20x5 (Settlement date):Accounts payable 5,107,200Foreign currency transaction loss [$96,000 x (P53.80 P53.20)] 57,600

Cash ($96,000 x P53.80). 5,164,800To record exchange loss on accounts payable in euros and settlement ofaccounts payable in euros at the spot rate of P53.80.

Note the following: The investment in Pineapple Computers, Inc shares is a non-monetary item that is

carried at fair value as it is classified as equity investment through profit or loss (ora financial asset FVTPL refer PFRS 9). The investment is revalued and translated atthe rate on the date of revaluation, that is, December 31, 20x4.

The equipment is translated at the spot rate at the date of purchase and, being anon-monetary item, is carried at cost. It is not adjusted for the change in theexchange rate at balance sheet date. The accounts payable in euros is a monetaryitem and is remeasured using the current/closing rate at balance sheet date. Theexchange loss is expensed off to the income statement

Problem VII1. May 1 Inventory (or Purchases) 8,400

Accounts Payable 8,400Foreign purchase denominated in pesos

June 20 Accounts Payable 8,400Cash 8,400

Settle payable.July 1 Accounts Receivable 10,000

Sales 10,000Foreign sale denominated in pesos

August 10 Cash 10,000Accounts Receivable 10,000

Collect receivable.2. May 1 Inventory (or Purchases) 8,400

Accounts Payable (FC1) 8,400Foreign purchase denominated in yen:P8,400 / P.0070 = FC1 1,200,000

June 20 Foreign Currency Transaction Loss 600Accounts Payable (FC1) 600

Revalue foreign currency payable topeso equivalent value:P9,000 = FC1 1,200,000 x P.0075 June 20 spot rate- 8,400 = FC1 1,200,000 x P.0070 May 1 spot rateP 600 = FC1 1,200,000 x (P.0075 - P.0070)

Accounts Payable (FC1) 9,000Foreign Currency Units (FC1) 9,000

Settle payable denominated in FC1.July 1 Accounts Receivable (FC2) 10,000

Sales 10,000Foreign sale denominated in foreign currency 2

(FC 2)FC3: P10,000 / P.20 = FC2 50,000

August 10 Accounts Receivable (FC2) 1,000Foreign Currency Transaction Gain 1,000

Revalue foreign currency receivableto U.S. dollar equivalent value:P11,000 = FC2 50,000 x P.22 Aug. 10 spot rate- 10,000 = FC2 50,000 x P.20 July 1 spot rateP 1,000 = FC2 50,000 x (P.22 - P.20)

Foreign Currency Units (FC2) 11,000Accounts Receivable (FC2 11,000

Receive FC 2 in settlement of receivableProblem VIII1. Denominated in FC

RR Imports reports in Philippine pesos:12/1/x4 12/31/x4 1/15/x5

TransactionDate

Balance SheetDate

SettlementDate

DirectExchangeRate

P.70 P.66 P.68

2. December 1, 20x4Inventory (or Purchases) 10,500

Accounts Payable (FC) 10,500P10,500 = FC 15,000 x P.70

December 31, 20x4Accounts Payable (FC) 600

Foreign Currency Transaction Gain 600Revalue foreign currency payable toequivalent peso value:

P 9,900 = FC15,000 x P.66 Dec. 31 spot rate-10,500 = FC 15,000 x P.70 Dec. 1 spot rateP 600 = FC 15,000 x (P.66 - P.70)

January 15, 20x5Foreign Currency Transaction Loss 300

Accounts Payable (FC) 300Revalue payable to current peso equivalentP10,200 = FC 15,000 x P.68 Jan. 15, 20x5, value- 9,900 = FC 15,000 x P.66 Dec. 31, 20x4, valueP 300 = FC 15,000 x (P.68 - P.66)Accounts Payable (FC) 10,200

Foreign Currency Units (FC) 10,200P10,200 = FC15,000 x P.68

Accounts Payable (FC)(FC 15,000 x P.70) 12/1/x4 10,500

AJE 12/31/x4 600(FC15,000 x P.66) Bal 12/31/x4 9,900

AJE 1/15/x5 300(FC15,000 x P.68) Bal 1/15/ x5 10,200

1/15/x5 Settlement 10,200Bal 1/16/x5 -0-

Problem IX1. December 31, 20x6

Accounts Receivable (FC1) 10,000Foreign Currency Transaction Gain 10,000

Adjust receivable denominated in FC1to current peso equivalentand recognize exchange gain:P83,600 = FC475,000 x P.176 Dec. 31 spot rate- 73,600 = Preadjusted Dec. 31, 20x6, valueP10,000

Accounts Payable (FC2) 5,200Foreign Currency Transaction Gain 5,200

Adjust payable denominated in foreigncurrency to current peso equivalentand recognize exchange gain:P175,300 = Preadjusted Dec. 31, 20x6, value- 170,100 = FC2 21,000,000 x P.0081, Dec. 31 spot rateP 5,200

2. Accounts Receivable (FC1) 1,900Foreign Currency Transaction Gain 1,900

Adjust receivable denominated in FC1to equivalent peso value onsettlement date:P85,500 = FC1 475,000 x P.180 20x7 collection date value- 83,600 = FC1 475,000 x P.176 Dec. 31, 20x6, spot rateP 1,900 = FC1 475,000 x (P.180 - P.176)

Cash 164,000Foreign Currency Units (FC1) 85,500

Accounts Receivable (FC1) 85,500Accounts Receivable (P) 164,000

Collect all accounts receivable.3. Accounts Payable (FC2) 6,300

Foreign Currency Transaction Gain 6,300Adjust payable to equivalent pesovalue on settlement date:P163,800 = FC2 21,000,000 x P.0078 20x7 payment date value- 170,100 = FC2 21,000,000 x P.0081 Dec. 31, 20x6, spot rateP 6,300 = FC2 21,000,000 x (P.0078 - P.0081)

Accounts Payable (P) 86,000Accounts Payable (FC2) 163,800

Foreign Currency Units (FC2) 163,800Cash 86,000

Payment of all accounts payable.4. Transaction gain on FC:

December 31, 20x6 P10,000 gainDecember 31, 20x7 1,900 gain

Overall P11,900 gain5. Transaction gain on FC2:

December 31, 20x6 P 5,200 gainDecember 31, 20x7 6,300 gain

Overall P11,500 gain6. Overall foreign currency transactions gain:

Gain on FC1 transaction P11,900Gain on FC2 transaction 11,500

P23,400CDL could have hedged its exposed position. The exposed positions are only thosedenominated in foreign currency units. The accounts receivable denominated inFC1 could be hedged by selling FC1 in the forward market, thereby locking in thevalue of the FC1. The accounts payable denominated in FC2 could be hedged bybuying FC2 in the forward market, thereby locking in the value of the FC2.

Problem XAccountsReceivable

AccountsPayable

Foreign CurrencyTransaction

Exchange LossForeign Currency

TransactionExchange Gain

Case 1 NA P16,000(a) NA P2,000(b)Case 2 P38,000(c) NA NA P2,000(d)Case 3 NA P27,000(e) P3,000(f) NACase 4 P6,250(g) NA P1,250(h) NA

(a) LCU 40,000 x P.40(b) LCU 40,000 x (P.40 - P.45)(c) LCU 20,000 x P1.90(d) LCU 20,000 x (P1.90 - P1.80)(e) LCU 30,000 x P.90(f) LCU 30,000 x (P.90 - P.80)(g) LCU 2,500,000 x P.0025(h) LCU 2,500,000 x (P.0025 - P.003)

Multiple Choice Problems1. c C$1 / P.90 (C$1.11 = P1.00)2. d 20x4 20x5

P.4895 x FC30,000 P14,685 P.4845 x FC30,000 P14,535P.4845 x FC30,000 14,535 P.4945 x FC30,000 14,835

Gain P 150 Loss P (300)3. b

20x4Date of transaction (12/1/20x4) P .0095Balance sheet date (12/31/20x4) .0096Foreign exchange currency loss per FC P .0001Multiplied by: No. of FC 1,000,000Foreign exchange currency loss P 100

20x5Balance sheet date (12/31/20x4) P .0096Date of settlement (1/10/20x5) .0094Foreign exchange currency gain per FC P .0002Multiplied by: No. of FC 1,000,000Foreign exchange currency gain P 200

4. cBalance sheet date (12/31/20x4) P125,000Date of settlement (7/1/20x5) 140,000Foreign exchange currency loss P 15,000

5. b January 15Foreign Currency Units (LCU) 300,000Exchange Loss 15,000

Accounts Receivable (LCU) 315,000Collect foreign currency receivable andrecognize foreign currency transactionloss for changes in exchange rates:P300,000 = (LCU 900,000 / LCU 3) Jan. 15 value- 315,000 = Dec. 31 Peso equivalentP 15,000 Foreign currency transaction loss

6. c spot rate on the date of transaction7. a - spot rate on the date of transaction8. d P120,000 = July 1, 20x4, Peso equivalent value

P140,000 = December 31, 20x4, Peso equivalent value(LCU 840,000 / P140,000) = LCU 6 / P1

-105,000 = July 1, 20x5, Peso equivalent value(LCU 840,000 / 8) = P105,000

P(35,000) Foreign currency transaction loss

9. d P27,000 = P6,000 + P20,000 + P1,000Accounts Payable (FCU)

1/20/x4 90,000AJE 6,0003/20/x4 96,000

Foreign Exchange Loss 6,000Accounts Payable (FCU) 6,000

Notes Payable (FCU)7/01/x4 500,000AJE 20,000

12/31/x4 520,000Foreign Exchange Loss 20,000

Notes Payable (FCU) 20,000

Interest Payable (FCU)(FCU500,000 x .10 x 1/2 year) 25,000

AJE 1,00012/3/x4 26,000

Interest expense 25,000Interest Payable (FCU) 25,000

Foreign Exchange Loss 1,000Interest Payable (FCU) 1,000

10. c P5,000Accounts Receivable (FCU)

10/15/x4 100,000AJE 5,000

11/16/x4 105,000 Settlement 11/16/x4 105,000Accounts Receivable (FCU) 5,000

Foreign Exchange Gain 5,000Note: The receivable is recorded on October 15, 20x4, when the goods wereshipped, not on September 1, 20x4, when the order was received.

11. b P1,000Accounts Payable (FCU)

(10,000 x P.60) 4/08/x4 6,000x4 AJE 500

(10,000 x P.55) 12/31/x4 5,500X5 AJE 1,000

(10,000 x P.45) 3/01/x5 4,500Settlement 4,500

Bal. -0-X5 AJE Accounts Payable (FCU) 1,000

Foreign Exchange Gain 1,000

12. b P9,000 = 300,000 FCUs x (P1.65 - P1.62). The foreign currency transaction gain iscomputed using spot rates on the transaction date (November 30, 20x4) and thebalance sheet date (December 31, 20x4). The forward exchange rates are notused because the transaction was not hedged.

13. c Date of transaction (7/7) P 2.08Balance sheet date (8/31) 2.05Foreign exchange currency gain per FCU P .03Multiplied by: No. of FCU 350,000Foreign exchange currency gain P 10,500

14. b The value of the asset acquired should be the spot rate on the date of transaction, i.e.P-80. Therefore, the final recorded value of the electric generator should be P40,000 (P.80 x50,000 FCs)

15. aDate of transaction P .75Date of settlement .80Foreign exchange currency gain per FCU P .05Multiplied by: No. of FCU 200,000Foreign exchange currency gain P 10,000

16. dDate of transaction (12/15) P .60Balance sheet date (12/31) .65Foreign exchange currency gain per FCU P .05Multiplied by: No. of FCU 80,000Foreign exchange currency gain P 4,000

17. bDate of transaction (11/30) P 1 .65Balance sheet date (12/31) 1.62Foreign exchange currency gain per FCU P .03Multiplied by: No. of FCU 300,000Foreign exchange currency gain P 9,000

18. bDate of transaction (11/30) P 1.49Balance sheet date (12/31) 1.45Foreign exchange currency gain per FCU P .04Multiplied by: No. of FCU 500,000Foreign exchange currency gain P 20,000

19. aDate of arrival (P1,000 / 480,000 FC) P .00208Date of departure (P100/50,000 FC) .00200Foreign exchange currency loss per FCU P .00008Multiplied by: No. of FCU 50,000Foreign exchange currency loss P 4

20. bDate of transaction (10/1) P 1.20

Balance sheet date (12/31) 1.10Foreign exchange currency gain per LCU P .10Multiplied by: No. of LCU 5,000Foreign exchange currency gain P 500

21. dDate of transaction (11/2) P 1. 08Balance sheet date (12/31) 1.10Foreign exchange currency gain per LCU P .02Multiplied by: No. of LCU 23,000Foreign exchange currency gain P 460

22. aDate of transaction (9/3) : P17,000 / P.85 = 20,000 FC P . 85Date of settlement (10/10) .90Foreign exchange currency loss per FC P .05Multiplied by: No. of FC 20,000Foreign exchange currency loss P 1,000

23. aDate of transaction (12/5) P .265Balance sheet date (12/31) .262Foreign exchange currency gain per FC P .003Multiplied by: No. of FC 100,000Foreign exchange currency gain P 300

24. dBalance sheet date (12/31) P .262Date of settlement (1/10) .264Foreign exchange currency loss per FC P .002Multiplied by: No. of FC 100,000Foreign exchange currency loss P 200

25. cForeign exchange currency gain (No. 25) P 300Foreign exchange currency loss (No. 26) _ 200Overall gain , net P 100

or,Date of transaction (12/5) P .265Date of settlement (1/10) .264Foreign exchange currency gain per FC P .001Multiplied by: No. of FC 100,000Foreign exchange currency gain P 100

26. b any gain or loss on foreign currency should be considered ordinary.27. d

Pigskin, a Philippine CorporationDate of transaction (4/8) : P1 / .65 FC (direct quote) P 1.54Date of settlement (5/8): P1/ .70 FC (direct quote) 1.43Foreign exchange currency loss per FC P .11Multiplied by: No. of FC 35,000Foreign exchange currency loss P 3,850

28. d the amount of sales should be the spot rate on the date of transaction (or the balancesheet date - historical rate). I.e., P1.7241 x 10,000 FCs = P17,241.

29. e1/1: Date of transaction spot rate P 1.724112/31: Balance sheet date 1.8182Foreign exchange currency gain per FC P .0941Multiplied by: No. of FC 10,000Foreign exchange currency gain P 941

30. bBalance sheet date (12/31/20x4) P 1.8182Date of settlement (1/30/20x5) 1.6666Foreign exchange currency loss per FC P .1516Multiplied by: No. of FC 10,000Foreign exchange currency loss P 1,516

31. a since accounts payable is an exposed account meaning their value will fluctuate basedon the spot exchange rates, the value of the accounts payable should be the value onMay 8, i.e., the spot rate of P1.25 (P.15 x 2,000,000 FCs = P2,500,000).

32. c5/8: Date of transaction spot rate P 1.255/31: Balance sheet date 1.26Foreign exchange currency loss per FC P 0.01Multiplied by: No. of FC 2,000,000Foreign exchange currency loss P 20,000

33. e in a two-transaction approach, the recognition of foreign exchange gain or loss isseparate from the settlement, therefore, the amount of accounts payable to be settledshould be the spot rate on the settlement date, i.e., P1.20 (P1.20 x 2,000,000 FCs = P2,400,000)

34. aBalance sheet date (12/31/20x4) P8,000Date of settlement (3/2/20x5) 6,900Foreign exchange currency loss P 1,100

35. d4/8/20x3: Date of transaction P 97,00012/31/20x3: Balance sheet date 103,000Foreign exchange currency loss P 6,000

36. dBalance sheet date (12/31/20x3) P103,000Date of settlement (4/2/20x4) 105,000Foreign exchange currency loss P 2,000

37. d11/4/x6: Date of transaction spot rate P .7012//31/x6: Balance sheet date .67Foreign exchange currency loss per FC P 0.03Multiplied by: No. of FC 100,000Foreign exchange currency loss P 3,000

38. d10/5/x6: Date of transaction spot rate P .8012//31/x6: Balance sheet date .84Foreign exchange currency loss per FC P 0.04Multiplied by: No. of FC 100,000Foreign exchange currency loss P 4,000

39. bIncome statement:

12/20/x6: Date of transaction spot rate P .79812//31/x6: Balance sheet date .795Foreign exchange currency gain per FC P 0.003Multiplied by: No. of FC 1,000,000Foreign exchange currency gain P 3,000

Balance sheet: Inventory should be spot rate on the transaction date:P.798 x 1,000,000 = P798,000.

40. aIncome statement:

12/15/x6: Date of transaction spot rate P .18112//31/x6: Balance sheet date .180Foreign exchange currency loss per FC P 0.001Multiplied by: No. of FC 1,000,000Foreign exchange currency loss P 1,000

Sales should be spot rate on the transaction date:P.181 x 1,000,000 = P181,000

41. b - 70,000 x P.6542. b - 70,000 x P.6543. a - 70,000 x P.7244. c - 70,000 x (P.72 - P.65)45. b - 70,000 x (P.69 - P.72)46. d - 25,000 x P1.1447. b - 25,000 x P1.0648. a - 25,000 (P1.14 - P1.06)49. d - 25,000 (P1.06 - P1.09)50. d spot rate on the date of settlement51. b spot rate on the date of purchase/transaction52. b - spot rate on the date of transaction53. a refer to page 646 of the book for the discussion of one-transaction theory54. c (P.82 P.82) x 1,000 FCUs55. No answer available - P5 exchange gain = (P.81 P.8050) x 1,000 FCUs56. b spot rate on the date of transaction(loan date) 5,000,000 x P1.15057. d spot rate on the balance sheet date (5,000,000 x 5%) x P1.149058. a (P1.15 P1.149) x 5,000,000 = P5,000 gain59. d spot rate on the date of transaction(loan date) (5,000,000 x 5%) x P1.148560. d

P78,000/P.80 per FCU = P 97,500P78,000/P.78 per FCU = _100,000Difference in FCU = P (2,500)

Difference in pesos (2,500) x .78 = P (1,950)61. b - P97,500 francs (from 60 above) x P.78 = P76,05062. d

Indirect exchange rate:for the Singapore dollars: 1/07025 = 1.4235for the HK dollars: 1/2.5132 = .3979

63. a - HK$10,000 x P2.5132/HK$ = P25,13264. b - P10,000/P.7025 = 14,235 Singapore dollars

Quiz-XIX1. c P4,000

Accounts Payable (FCU)(200,000 x P.4875) 12/10/x4 97,500

AJE 4,000(200,000 x P.4675) 12/31/x4 93,500

Accounts Payable (FCU) 4,000Foreign Exchange Gain 4,000

2. d P280,000 = July 1, 20x5, Peso equivalent value-240,000 = December 31, 20x4, Peso equivalent valueP 40,000 Foreign currency transaction loss

3. d20x4: (P.5395 P.5445) loss x 70,000 FCU = P350 loss20x5: (P.5445 - .P5495) loss x 70,000 FCU = P350 loss

4. b - 30,000 x P.67 = P20,100; P20,100 - P20,400 = P300 loss5. b

Date of transaction (7/3) P 1.58Balance sheet date (8/31) 1.55Foreign exchange currency gain per FCU P .03Multiplied by: No. of FCU 375,000Foreign exchange currency gain P 11,250

6. bDate of transaction (3/1) : P31,000 / P.31 = 100,000 FC P . 31Date of settlement (5/10) .34Foreign exchange currency gain per FC P .03Multiplied by: No. of FC 100,000Foreign exchange currency gain P 3,000

7. P4,000 gain12/12/x6: Date of transaction spot rate P .2012//31/x6: Balance sheet date .24Foreign exchange currency gain per FC P 0.04Multiplied by: No. of FC 100,000Foreign exchange currency gain P 4,000

8. P5,000 gain

9/30/x6: Date of transaction spot rate P .9012//31/x6: Balance sheet date .85Foreign exchange currency gain per FC P 0.05Multiplied by: No. of FC 100,000Foreign exchange currency gain P 5,000

9. d20x4: (P.5395 P.5445) loss x 70,000 FCU = P350 loss20x5: (P.5445 - .P5495) loss x 70,000 FCU = P350 loss

10. P188,500 spot rate on the date of transaction (date of purchase) 6,500,000 x P0.02911. P26,000 exchange gain (P0.029 P0.025) x 6,500,00012. P162,500 spot rate on the date of settlement P0.025 x 6,500,000 = P162,50013. P87,376 spot rate on the date of transaction (date of sale) P1.016 x 86,000 = P87,37614. P516 exchange gain = (P1.022 P1.016) x 86,00015. P87,892 spot rate on the date of settlement16. P200,000 exchange gain = (P1.50 P1.48) x 10,000,000 FCUs17. P(500,000) exchange loss = (P1.45 P1.50) x 10,000,000 FCUs18. P136,920 = spot rate on the date of transaction (P1.1410 x 120,000 FCUs)19. P137,400 = spot rate on the date of settlement (P1.1450 x 120,000 FCUs)20. P360 exchange gain = (P1.420 P1.450) x 120,000 FCUs21. P480 exchange gain = (P1.1410 P1.1450) x 120,000 FCUs22. 20x3 - P1,000 gain; 20x4 - P500 loss

Account payable, Dec 05, 20x31,000,000 x P0.168 = 168,000

Account payable, Dec 31, 20x31,000,000 x P0.167 = 167,000

Gain 1,000Account payable, Dec 31, 20x3 167,000Account payable, at settlement 167,500Realized loss 500

23. 150,000 FCUs x (1.60 1.62) = P(3,000) loss24. 150,000 FCUs x 1.62 = P243,00025. P1,042 foreign exchange loss

10/15/x5 Accounts receivable 16,667Sales 20,000/P1.2 16,667

12/10/x5 No entry12/13/x5 Cash 20,000/P1.28 15,625

Foreign exchange loss 1,042Accounts receivable 16,667

26. P16,667 - refer to No. 2527. P16,66728. c29. c

TheoriesCompletion Statements

1. International Accounting Standards Board2. International Accounting Standards3. commodities

4. conversion5. translation6. indirect7. direct8. floating, free9. spot

10. differential rates of inflation11. purchasing power parity theory12. denominated13. measures14. exposed asset position15. exposed liability position16. transaction date17. bank wire transfers

True or False/Multiple Choice1. False 6. False 11. True 16. False 21. False 26. True 31. True 36. False2. True 7. True 12. False 17. True 22. True 27. False 32. False 37. True3. False 8. False 13. True 18. False 23. True 28. False 33. False 38. False4. True 9. True 14. False 19. False 24. False 29. True 34. True 39. True5. False 10. False 15. True 20. False 25. True 30. False 35. False 40. True41. False 46. b 51. c 56. d 61. c 66. d 71. d 76. b42. True 47. b 52. a 57. c 62. b 67. c 72. c 77. a43. False 48. d 53. a 58. d 63. a 68. c 73. b 78. d44. True 49. b 54. b 59. a 64. c 69. b 74. a 79. b45. True 50. d 55. d 60. c 65. c 70. d 75. c 80. d81. b 86. d 91. c 96. b82. d 87. b 92. a 97. a83. d 88. b 93. d 98. d84. c 89. b 94. c 99. c85. d 90. d 95. c / d 100. d

.