Chap011_Classproblems_solu

# Chap011_Classproblems_solu - Solutions to Chapter 11...

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Solutions to Chapter 11 In‐class Problems 1 E11-11 Foreign Currency Transactions [AICPA Adapted] 1. d 20X1 20X2 \$.4895 x DM30,000 \$14,685 \$.4845 x DM30,000 \$14,535 \$.4845 x DM30,000 14,535 \$.4945 x DM30,000 14,835 Gain \$ 150 Loss \$ (300 ) 2. b January 15 Foreign Currency Units (LCU) 300,000 Exchange Loss 15,000 Accounts Receivable (LCU) 315,000 Collect foreign currency receivable and recognize foreign currency transaction loss for changes in exchange rates: \$300,000 = (LCU 900,000 / LCU 3) Jan. 15 value - 315,000 = Dec. 31 U.S. dollar equivalent \$ 15,000 Foreign currency transaction loss 3. d \$120,000 = July 1, 20X1, U.S. dollar equivalent value \$140,000 = December 31, 20X1, U.S. dollar equivalent value (LCU 840,000 / \$140,000) = LCU 6 / \$1 105,000 = July 1, 20X2, U.S. dollar equivalent value (LCU 840,000 / 8) = \$105,000 \$(35,000 ) Foreign currency transaction loss 4. c C\$1 / \$.90 (C\$1.11 = \$1.00) 5. d \$280,000 = July 1, 20X5, U.S. dollar equivalent value -240,000 = December 31, 20X4, U.S. dollar equivalent value \$ 40,000 Foreign currency transaction loss 6. d 7. d

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