Beruflich Dokumente
Kultur Dokumente
Problem I
1.
Indirect Exchange Rates
Philippine 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
Direct Exchange Rate
P8,000
P40.00
$200; or
Problem II
a. Exchange rates:
Direct
Exchange Rate
Indirect
Exchange Rate
Arrival Date
Departure Date
2.
The direct exchange rate has decreased. This means that the peso has
strengthened during Mr. Alt's visit. For example, upon arrival, Mr. Alt had to pay P33
per each dollar. Upon departure, however, each dollar is worth just P32.50. This
means that the relative value of the peso has increased or, alternatively, the value
of the dollar has decreased.
3.
The Philippine peso equivalent values for the 100 Singapore dollars are:
Arrival date
100 dollars x P33.00 =
Departure date
100 dollars x P32.50 =
Foreign Currency Transaction Loss
P3,300
P
3,250
50
Mr. 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 III
1. 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 to
the foreign currency unit.
2.
Transaction
Importing
Importing
Settlement
Currency
Decreases
NA
G
NA
G
NA
L
NA
G
NA
L
NA
L
NA
G
Purchases..
Accounts payable ($24,000 x P40.55)
973,200
LCU
Peso
LCU
Problem IV
1.
December 1, 20x4 (Transaction date):
Accounts payable
Foreign currency transaction gain [$24,000 x (P40.80 P40.65)]
Cash ($24,000 x P40.65).
2.
NA
L
Exporting
Exporting
Peso
Decreases
6,000
973,200
6,000
P979,200
973,200
P 6,000
979,200
3,600
975,600
a.
a.1. None transaction date (December 1, 20x4)
a.2. P6,000 loss
a.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 sheet
b.2. P973,200 spot rate on the transaction date or historical rate on the balance sheet
date.
Problem V
1. December 1, 20x4 (Transaction date):
2,400,000
2,400,000
Accounts receivable..
Foreign currency transaction gain [$60,000 x (P40.70 P40.00)]
Accounts receivable valued at 12/31 Balance Sheet
($60,000 x P40.70)
Accounts receivable valued at 12/1 Date of Transaction
($60,000 x P40.00)
Adjustment to accounts receivable needed..
2.
42,000
42,000
P2,442,000
P
2,400,000
42,000
2,436,000
6,000
2,442,000
a.
a.1. None transaction date
a.2. P42,000 gain
a.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 sheet
b.2. P973,200 spot rate on the transaction date or historical rate on the balance sheet
date.
Problem VI
The entries to record these transactions and the effects of changes in exchange rates are
as follows:
November 1, 20x4 (Transaction date):
3,840,000
636,000
1,020,000
3,840,000
636,000
1,020,000
P4,860,000
3,840,000
P1,020,000
P3,840,000
3,888,000
19,200
Accounts payable
Foreign currency transaction loss [$96,000 x (P53.80 P53.20)]
Cash ($96,000 x P53.80).
48,000
P 972,000
19,200
5,107,200
P
5,088,000
19,200
5,107,200
57,600
5,164,800
2.
8,400
June 20
Accounts Payable
Cash
Settle payable.
8,400
July 1
Accounts Receivable
Sales
Foreign sale denominated in pesos
10,000
August 10
Cash
Accounts Receivable
Collect receivable.
10,000
May 1
8,400
8,400
8,400
10,000
10,000
8,400
June 20
July 1
August 10
600
600
9,000
9,000
10,000
10,000
1,000
1,000
11,000
11,000
Problem VIII
1. Denominated in FC
RR Imports reports in Philippine pesos:
Direct
Exchange
Rate
2.
12/1/x4
12/31/x4
1/15/x5
Transaction
Date
Balance Sheet
Date
Settlement
Date
P.70
P.66
P.68
December 1, 20x4
Inventory (or Purchases)
Accounts Payable (FC)
P10,500 = FC 15,000 x P.70
December 31, 20x4
Accounts Payable (FC)
Foreign Currency Transaction Gain
Revalue foreign currency payable to
equivalent peso value:
10,500
600
10,500
600
300
AJE 12/31/x4
1/15/x5 Settlement
10,200
10,200
10,200
12/1/x4
10,500
Bal 12/31/x4
AJE 1/15/x5
Bal 1/15/ x5
9,900
300
10,200
Bal 1/16/x5
Problem IX
1. December 31, 20x6
Accounts Receivable (FC1)
Foreign Currency Transaction Gain
Adjust receivable denominated in FC1
to current peso equivalent
and recognize exchange gain:
P83,600 = FC475,000 x P.176 Dec. 31 spot rate
- 73,600 = Preadjusted Dec. 31, 20x6, value
P10,000
2.
300
-0-
10,000
5,200
1,900
10,000
5,200
1,900
Cash
Foreign Currency Units (FC1)
Accounts Receivable (FC1)
Accounts Receivable (P)
Collect all accounts receivable.
3.
164,000
85,500
85,500
164,000
6,300
86,000
163,800
4.
P10,000
1,900
P11,900
gain
gain
gain
5.
P 5,200
6,300
P11,500
gain
gain
gain
6.
6,300
163,800
86,000
P11,900
11,500
P23,400
CDL could have hedged its exposed position. The exposed positions are only those
denominated in foreign currency units. The accounts receivable denominated in
FC1 could be hedged by selling FC1 in the forward market, thereby locking in the
value of the FC1. The accounts payable denominated in FC2 could be hedged by
buying FC2 in the forward market, thereby locking in the value of the FC2.
Problem X
Accounts
Receivable
Accounts
Payable
Foreign Currency
Transaction
Exchange Loss
Foreign Currency
Transaction
Exchange 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)
NA
Case 4
P6,250(g)
NA
P1,250(h)
NA
P.4845
P.4945
x
x
.0095
.0096
P
.0001
1,000,000
P
100
20x5
4.
5.
.0096
.0094
P .0002
1,000,000
P
200
20x5
P14,535
14,835
P (300)
FC30,000
FC30,000
Loss
January 15
Foreign Currency Units (LCU)
Exchange Loss
Accounts Receivable (LCU)
Collect foreign currency receivable and
recognize foreign currency transaction
loss for changes in exchange rates:
P300,000 = (LCU 900,000 / LCU 3) Jan. 15 value
- 315,000 = Dec. 31 Peso equivalent
P 15,000 Foreign currency transaction loss
P125,000
140,000
P 15,000
300,000
15,000
315,000
1/20/x4
AJE
3/20/x4
6,000
Interest expense
Interest Payable (FCU)
7/01/x4
AJE
12/31/x4
20,000
10/15/x4
AJE
11/16/x4
6,000
500,000
20,000
520,000
20,000
90,000
6,000
96,000
25,000
1,000
26,000
25,000
1,000
1,000
Settlement
11/16/x4
5,000
105,000
5,000
Note: The receivable is recorded on October 15, 20x4, when the goods were
shipped, not on September 1, 20x4, when the order was received.
11. b P1,000
500
X5 AJE
1,000
Settlement
4,500
(10,000 x P.60)
4/08/x4
6,000
(10,000 x P.55)
12/31/x4
5,500
(10,000 x P.45)
3/01/x5
4,500
Bal.
1,000
-0-
1,000
12.
P9,000 = 300,000 FCUs x (P1.65 - P1.62). The foreign currency transaction gain is
computed using spot rates on the transaction date (November 30, 20x4) and the
balance sheet date (December 31, 20x4). The forward exchange rates are not
used because the transaction was not hedged.
13. c
2.08
2.05
P
.03
350,000
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 x
50,000 FCs)
15. a
16. d
17. b
18. b
19. a
20. b
Date of transaction
Date of settlement
Foreign exchange currency gain per FCU
Multiplied by: No. of FCU
Foreign exchange currency gain
.75
.80
P
.05
200,000
P 10,000
.60
.65
P
.05
80,000
P 4,000
1.49
1.45
P
.04
500,000
P 20,000
P .00208
.00200
P .00008
50,000
P
4
1 .65
1.62
P
.03
300,000
P 9,000
1.20
21. d
22. a
23. a
24. d
1.10
.10
5,000
P
500
P
25. c
or,
1. 08
1.10
P
.02
23,000
P
460
. 85
.90
P
.05
20,000
P 1,000
.265
.262
P .003
100,000
P
300
.262
.264
P .002
100,000
P
200
P
_
P
300
200
100
.265
.264
P .001
100,000
P
100
1.54
1.43
P
.11
35,000
P 3,850
28. d the amount of sales should be the spot rate on the date of transaction (or the balance
sheet date - historical rate). I.e., P1.7241 x 10,000 FCs = P17,241.
29. e
30. b
P 1.7241
1.8182
P .0941
10,000
P
941
P
P
P
1.8182
1.6666
.1516
10,000
1,516
31. a since accounts payable is an exposed account meaning their value will fluctuate based
on the spot exchange rates, the value of the accounts payable should be the value on
May 8, i.e., the spot rate of P1.25 (P.15 x 2,000,000 FCs = P2,500,000).
32. c
1.25
1.26
P
0.01
2,000,000
P
20,000
35. d
36. d
37. d
P8,000
6,900
P 1,100
P 97,000
103,000
P 6,000
P103,000
105,000
P 2,000
.70
.67
P
0.03
100,000
P
3,000
38. d
39. b
Income statement:
.80
.84
P
0.04
100,000
P
4,000
.798
.795
P
0.003
1,000,000
P
3,000
.181
.180
P
0.001
1,000,000
P
1,000
P (1,950)
Quiz-XIX
1. c P4,000
AJE
3. d
P280,000
-240,000
P 40,000
=
=
97,500
93,500
4,000
4,000
6. b
1.58
1.55
P
.03
375,000
P 11,250
7. P4,000 gain
8. P5,000 gain
. 31
.34
P
.03
100,000
P 3,000
.20
.24
P
0.04
100,000
P
4,000
9. d
.90
.85
P
0.05
100,000
P
5,000
10. P188,500 spot rate on the date of transaction (date of purchase) 6,500,000 x P0.029
11. P26,000 exchange gain (P0.029 P0.025) x 6,500,000
12. P162,500 spot rate on the date of settlement P0.025 x 6,500,000 = P162,500
13. P87,376 spot rate on the date of transaction (date of sale) P1.016 x 86,000 = P87,376
14. P516 exchange gain = (P1.022 P1.016) x 86,000
15. P87,892 spot rate on the date of settlement
16. P200,000 exchange gain = (P1.50 P1.48) x 10,000,000 FCUs
17. P(500,000) exchange loss = (P1.45 P1.50) x 10,000,000 FCUs
18. 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 FCUs
21. P480 exchange gain = (P1.1410 P1.1450) x 120,000 FCUs
22. 20x3 - P1,000 gain; 20x4 - P500 loss
Account payable, Dec 05, 20x3
1,000,000 x P0.168 =
168,000
Account payable, Dec 31, 20x3
1,000,000 x P0.167 =
167,000
Gain
1,000
Account payable, Dec 31, 20x3
Account payable, at settlement
Realized loss
23. 150,000 FCUs x (1.60 1.62) = P(3,000) loss
24. 150,000 FCUs x 1.62 = P243,000
25. P1,042 foreign exchange loss
10/15/x5 Accounts receivable
Sales 20,000/P1.2
12/10/x5 No entry
12/13/x5 Cash 20,000/P1.28
Foreign exchange loss
Accounts receivable
26. P16,667 - refer to No. 25
27. P16,667
28. c
29. c
Theories
Completion Statements
1. International Accounting Standards Board
2. International Accounting Standards
3. commodities
167,000
167,500
500
16,667
15,625
1,042
16,667
16,667
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
conversion
translation
indirect
direct
floating, free
spot
differential rates of inflation
purchasing power parity theory
denominated
measures
exposed asset position
exposed liability position
transaction date
bank wire transfers
True
False
True
False
True
41.
42.
43.
44.
45.
False
True
False
True
True
46.
47.
48.
49.
50.
b
b
d
b
d
51.
52.
53.
54.
55.
c
a
a
b
d
81.
82.
83.
84.
85.
b
d
d
c
d
86.
87.
88.
89.
90.
d
b
b
b
d
91.
92.
93.
94.
95.
c
a
d
c
c/d
16.
17.
18.
19.
20.
False
True
False
False
False
21.
22.
23.
24.
25.
False
True
True
False
True
26.
27.
28.
29.
30.
True
False
False
True
False
d
c
d
a
c
61.
62.
63.
64.
65.
c
b
a
c
c
66.
67.
68.
69.
70.
d
c
c
b
d
56.
57.
58.
59.
60.
96.
97.
98.
99.
100.
b
a
d
c
d
31.
32.
33.
34.
35.
71.
72.
73.
74.
75.
True
False
False
True
False
36.
37.
38.
39.
40.
False
True
False
True
True
d
c
b
a
c
76.
77.
78.
79.
80.
b
a
d
b
d