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  • Exercise Answers - Spot Rates

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    John Philip L Concepcion
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    ATC corp purchased raw materials from a foreign supplier on May 8. Payment of 2 million foreign currency units was due on May 31. The exchange rates on relevant dates were provided. To calculate the amount in ATC's functional currency to pay on June 7, the payment amount is adjusted using the exchange rates, resulting in a cost of 2.4 million functional currency units. Brisco Bricks also purchased raw materials on May 8 from a foreign supplier, with payment due on May 31. The exchange rates on relevant dates were provided. Brisco would record a foreign exchange loss of 20,000 on May 31.

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    ATC corp purchased raw materials from a foreign supplier on May 8. Payment of 2 million foreign currency units was due on May 31. The exchange rates on relevant dates were provided. To calculate the amount in ATC's functional currency to pay on June 7, the payment amount is adjusted using the exchange rates, resulting in a cost of 2.4 million functional currency units. Brisco Bricks also purchased raw materials on May 8 from a foreign supplier, with payment due on May 31. The exchange rates on relevant dates were provided. Brisco would record a foreign exchange loss of 20,000 on May 31.

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    310 views1 page

    Exercise Answers - Spot Rates

    Uploaded by

    John Philip L Concepcion
    ATC corp purchased raw materials from a foreign supplier on May 8. Payment of 2 million foreign currency units was due on May 31. The exchange rates on relevant dates were provided. To calculate the amount in ATC's functional currency to pay on June 7, the payment amount is adjusted using the exchange rates, resulting in a cost of 2.4 million functional currency units. Brisco Bricks also purchased raw materials on May 8 from a foreign supplier, with payment due on May 31. The exchange rates on relevant dates were provided. Brisco would record a foreign exchange loss of 20,000 on May 31.

    Copyright:

    © All Rights Reserved
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    ATC corp purchases raw material from its foreign supplier, JLB, on May 8.

      Payment
    of 2,000,000 foreign currency units (FC) is due in 30 days.  May 31 is ATC's fiscal
    year-end.  The pertinent exchange rates were as follows:
      Indirect Exchange
    rates
    May 8 0.8000
    May 31 0.7937
    June 7 0.8333
     
    How much will it cost, in terms of the Functional Currency, ATC to finally pay the
    payable on June 7? 

    2,400,000.

    Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May
    8.  Payment of 2,000,000 foreign currency units (FC) is due in 30 days.  May 31 is
    Brisco's fiscal year-end.  The pertinent exchange rates were as follows:
      Selling Spot Buying Spot
    Rate Rate
    May 8 P 1.25 P 1.23
    May 31 P 1.26 P 1.25
    June 7 P 1.20 P 1.21
     
    How much Foreign Exchange Gain or Loss should Brisco record on May 31? 

    20,000 loss.

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