Chapt, 2 what isthe foreign exchange gq from the Syrian wholesaler? P2500 gain 2500 loss i 9, 13, Using the same information in No. ie Toss on July 20, 2016 transaction arising a. P500 gain c b. 500 loss a. 14. Using the same information in No. 9. what is the foreign exchange gain o, lose on July 3, 2016 transaction arising ftom the Syrian wholesaler 2,000 gain 2,000 loss a. b. P1,600 loss © 1,600 gain a. 15. During June and July 2016, Caltex (which reports on a calendar-year bass ‘and issues quarterly financial statements) had the following transactions with foreign businesses: : Billing Exchange Rate Cuency __(Drect) ~ Date Vendor A: 6/15/16 Imported merchancise costing 10,000 euros rom French manufacturer, Euros Nature of Transaction Pe 7ISI\6 Paid entire amount owed @ Customier A: 6/20/16 Sold merchandise for 20,000 real to a Brazilian retailer. Real P23 7NSI\6 Received tull payment. 2 ‘On June 30, as Pn pr 2016: the spot exchange rate for euros was Péd and for real What isthe foreign e: nea monulacues eo IN orloss on June 30, 2016 arising from the . P3000 b. 20000 con £. P10,000 gain . 10,000 loss 10,000 gain 30.000 gain a Using the some information in No. 15, what i i * in No. 15, what i the foreign exchange aait H9Ss on June 30, 2016 arising rom the Brean retoler? a. P20,000 loss a b. 12,600 055 a. 8,000 gain 8,000 loss Using the same information in No. 15. what.is the foreign gain or loss. on July 15, 2016 transaction arising from the Brazilian retailer? a. P12,000 loss c. _ P20,000 loss b. 12,000 gain d. 8,000 loss. 19. An entity purchases plant from a foreign supplier for S million baht on January __ 31/2016, when the exchange rate was 2 baht = P1. At the entity's year-end ‘of March 31, 2016, the amount has not been paid. The closing rate was 1.5 _ baht= PI. The entity's functional currency is the peso. Which of the following statements is conect? Cost of plant P2 milion, exchange loss P.5 milion, trade payable P15 million. b. Costof plant P1.S milion, exchange loss P 6 milion, trade payable P2 milion. c. _Costof plant PI Smilion. exchange loss P.5 milion. trade payable P2 million. 4. Cost of plant P2mtion, exchange loss P.S milion, trade payable P2 milion, Juan, a Philippine Corporation, bought inventory items from a supplier in‘Germany on November 5, 2016 for 100,000 marks, when the spot rate ‘was P21. At Juan's December 31, 2016, year end, the spot rate wos P20:5. © On January 15, 2017, Juan bought 100,000 marks at the spot rate of P20.90 ‘gnd paid the invoice. How much should Juan report in its income stafernents for 2016 and 2017 as foreign exchange transaction gain or (loss) ® 2016 ~—2017 2016 2017 a. 160,000) 40,000 c.P 0 PIOQ0 3d. 10000 0 b, $0,000 (40.000) (AICPA Modified)586 Chapter It 27. Using the same information in No. 26, how much foreign currency will it cost Brisco to finally pay the payable on June 7? a. P1,666,667 © b. 2,440,000 2,520,000 d, _ P2,400,000 28. Halika Trading sells gdods to Busit Company, Bangkok, for Baht 1,000,000. The exchange rate af this time is P0.9875/Baht. Busit pays 20 days later when the prevailing exchange is P1: Baht 1. By reason of exchange fluctuation, how much do Halika and Busit stand to gain or ose if the agreed currency of invoice is Thailand Baht? Haliko:P 0; Busit: P12,500 oss Halika: P 12,500 loss; gogo (Adapted) 2. On November 15, 2014, Celt, Inc., a Philippine Company, ordered merchandise FOB shipping point trom Japanese Company for 200,000 yens. The merchandise was shipped and invoiced to Celt onDecember 10, 2016. Celt paid the invoice on January 10, 2017. The spot rates for yens dn the respective dates are as follows: November 15,2016... P4955 December 10, 2016... A875 December 31, 2016... A675 Jonvary 10,201 MATS In Celt's December 31, 2016 income statement, the foreign exchange gain is: a. P9;600 P4000 b. 8000 d. 1,600 (AICPA 30. Hizon Holdings, Inc. is a parent company of a group of companies, but also does its own trading, It ought a fixed asset for $36,000 on November 1, 2016 when the exchange rate was $1,00 = P43.00. At December 31, 2016, the company's year-end, the supplier of the fixed asset has not been paid ‘and the exchange rate at that fime was $1.00 = 45,00. The company has not taken out a forward exchange contract for this payment as a hedge ‘ogainst adverse exchange rate movements. nthe balance sheet of Hizon Holdings, inc., what will be the values for fixed asset and the creditor who was unpaid? Fixed Asset Creditor Fa. P1,620,000 1,620,000 ‘b. -P1,620,000 1,548,000 ©. P1.548,000 —P1,548,000 1,620,000 > d. P1,548,000 7 (PhiICPA) October 2016, United Corporation obtained a loan amounting to US 0,000 for the purchase of machinery and equipment. By the end of the One-half of the loan was sill unpaid and a ten per cent decrease has place. If the foreign loan payable accounts corecty reported in the jance sheet at P2,970,000, the rate of exchange at the time the loan ‘obtained must have been: $1.00 = 44,00 c. a. $1.00 = P46.00 b. $1.00=P45.00 4. $1.00 = P50.00 (Adapted) ‘May 1, 2016, the Manila Museum purchase an original Picasso's of ng for 100,000 foreign currencies (FCS, payable in 30 days. On May 1, spot rate is Pé.26 to 1 FC and the 30 day forwerd rate is P6.50 per FC. On, ay 30, when the bili paid, the spot rate is P6.70 per FrC. The cost of the iewing should be recorded at: a. P650,000 cc. P626,000 b. 670,000 d. 15974 (Adapted) 1,.2016, Magnolia Company purchases 1,000 pounds of chocolate foreign currencies (FCS), payable in 0 days. On July 1, a FC is 27.29; by August 30, he day of payment, the FCis worth P27.00. The jay forward rate on July | is 1 FC = P2800, Magnolia Company should d the cost of the chocolate as: @. 1,350,000 b. 1,364,500 a. c. P1,400,000 1,832,000 (Adapted)588 Chapter Uh 34. Waling-Waling Enterprises purchased for US 36,000 foreign curencies (FCS) on Moy 31,2016 when the exchange rate was $1.00= P2300. he company egcjedno! to fate oforwarc contac! on this obigation as ahedge ogainst adverse exchange rate fluctuations, At June 30, 2016, the end of the ‘company’s fiscal period, one-half of the obligation remained unpaid and the exchange rate has dropped.to $1 FC = P25.00. On the company’s June 30, 2016 balance sheet, the equipment should be reported at a valve of: 2. 828,000" <. P900,000 b. 864,000 936,000 (Adapted) 35. Century Buildings Company, a parent company of a group of companies, ‘acquired machinery for US $0,000 foreign currencies (FCS) on October 31, 2016 when the peso/FC rate was P26.00, the liabiltys to be.paid six-months after. By the end of the year, the peso/FC rate drastically increased to P32.00 ‘and jhis is considered as a devaluation or severe fluctuation. On its year- ‘end balance sheet, Century should repor the machinery 1,300,000 1,600,000 a. P1,040,000 c. b. 1,280,000 a (Adapted) 36. Anentity purchases plant from a foreign supplier for 3 milion baht on January 31,2016, when the éxchange rate was 2 baht =P1. At the entity's year-end ‘of March 31, 2016, the amount has not been paid. The closing rate was 1.5, baht =PI. The enfity’s functional currency is the peso. Which of the following statements is correct? A Ge reat P2 milion, exchange loss PO.5 million, trade payable 5 milion. B. Cost of plant P1.5 million, exchange loss P0.6 payable P2 million. €. Cott of plant 1.5 million, exchange loss 0.5 payable P2 million, D. Cost of plant P2 million, exchange loss PO.5 millioh, trade payable P2 million. 37. On October 1, 2016, Boni Co. purchased merchandise worth a total of 100.000 foreign currencies (FC'S) from its foreign supplier, payable within 30 ,days under an open account arrangement, Boni Co. issued a 30-day, noles payable in FC. On October 31,2016, Boni Co. paid the note. The following information on spot rates (P/FC) is provided: lion, trade jon, trade Buying —_Seling October 01,2016 P2403 P2415 October31, 2016 24.10 2422 589 Boni Co.'s foreign exchange goin or loss on the transaction is: ©. P5040 loss c. P12075 goin 7,000 loss 19.110 toss (Adapted) City Bank of Manila (CBM) commenced correspondence relationship with ‘Chicago Bank of USA in May, 2016. The following are their fransactions ‘during the month Debits: May 01 Remittance, cable = $1,000 (at P56.30/US$) May 15 Remittance, cable = $5,000 (at P56.35/USS) Credits: ‘May 10Demand draft = $1,000 (at P56.30/US$) May 25Sight draft = § 500 (at P56.45/US$) “it the prevailing exchange rate on May 31, 2016 was P56.75/US§, the fespective balances, on this date, for CBM and Chicago Bank are: ‘0. CBM:P170,725 Chicago: $1,500 c. CBM:P255,375 Chicago: $4,500 b. CBM:P253,325 Chicago: $4,500 d. CMB:P273,050 Chicago: $6,000 (Adapted) Ball Corp. had the following foreign currency transactions during 2016: + Merchandise was purchased from a foreign supplier on January 20, 2016 for the Philippine peso equivotent of P90,000. The invoice ‘was paid on March 20, 2016 at the Philippine peso equivalent of 96,000. * On July 1, 2016, Ball borowed the Philippine peso equivalent of 500,000 evidenced by a note that was payable in the lender's local currency on July 1, 2017. On December 31, 2016, the Philippine peso equivalents of the principal amount and accrued interest were P520,000 arid P26,000, respectively. interest on the note is 10% per annum. In Baits 2016 income statement, what amount should be included as foreign exchange loss? a PO ©. P21,000 b. 6000 3. 27,000 (AICPA)