20.Award: 10.00 points21.Award: 10.00 pointsMeilly Company, a Canadian company, sold merchandise inventory on account to a company in Long Beach, California, for US$800,000 on March1, 2017, with payment due on April 1, 2017. The following exchange rates existed on the dates significant for accounting purposes:March 1, 2017, spot rateUS$1.00 = C$0.98April 1, 2017, spot rateUS$1.00 = C$1.03March 1, 2017, forward 30-day rateUS$1.00 = C$1.05If Meilly Company did not hedge its receivable, what would be the exchange gain/loss? $40,000 loss$40,000 gain$56,000 loss$56,000 gainUS$800,000 (1.03 – 0.98) = CDN$40,000 gain. (Refer to the section “Accounting for Foreign Currency Transactions”)ReferencesMultiple ChoiceDiﬃculty: EasyLearning Objective: 10-01 Translate foreign currencytransactions and balances into the functional currency. SJ Corporation, a Canadian corporation, has a December 31 year-end. On January 1, 2016, it borrowed US$2,000,000 from an Americanbank. The loan is scheduled to be repaid on December 31, 2020. Interest of 10% is paid annually on December 31. The following exchange ratesexisted on the dates significant for accounting purposes:January 1, 2016US$1.00 = C$1.21Average 2016US$1.00 = C$1.18December 31, 2016US$1.00 = C$1.16Average 2017US$1.00 = C$1.10December 31, 2017US$1.00 = C$1.02What is SJ's exchange gain relating to the interest paid for the year ended December 31, 2016? (Refer to the section “Accounting for Foreign Currency Transactions”) References Multiple Choice Diﬃculty: Easy Learning Objective: 10-01 Translate foreign currency transactions and balances into the functional currency.
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