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Subject Topic: 2009 CPA newly released question (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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lucyinthesky
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Joined: 16 Apr 2009
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Posted: 08 May 2009 at 18:22 | IP Logged  

41. CPA

On October 1 of the current year, a U.S. company sold merchandise on account to a British company for
2,000 pounds (exchange rate, 1 pound = $1.43). At the company's December 31 fiscal year end, the
exchange rate was 1 pound = $1.45. The exchange rate was 1 pound = $1.50 on collection in January of
the subsequent year. What amount would the company recognize as a gain(loss) from foreign currency
translation when the receivable is collected?
a. $0
b. $100
c. $140
d. ($140)
Explanation
Choice "b" is correct

 

I think the anwser for U.S company it should be (100), 100 loss instead of 100 gain.

who can help me with this? Thanks a lot!

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globetrotter
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Posted: 08 May 2009 at 19:10 | IP Logged  

Gain is correct.

The US company received MORE dollars because the dollar depreciated at the settlement date.


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