Q1. Norton Co., a U.S. corporation, sold inventory on December 31, 2008, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows:
Dec 1 Spot rate $1.7241
Dec 31 Spot rate $1.8182
Jan 30 Spot rate $1.6666
What amount of foreign exchange gain or loss should be recorded on January 30?
a. $1,516 gain
b. $1,516 loss
c. $575 loss
d. $500 loss
Q2. Pigskin Co., a U.S. corporation, sold inventory on credit to a British company on April 8, 2008. Pigskin received payment of 35,000 pounds on May 8, 2008. The exchange rate was $1 = 0.65 on April 8 and $1 = 0.70 on May 8. What amount of foreign exchange gain or loss should be recognized? (round to the nearest dollar)
a. $10,500 loss
b. $10,500 gain
c. $1,750 loss
d. $3,846 loss
Q3. According to SFAS 52, which method is usually required for translating a foreign subsidiary's financial statements into the parent's reporting currency?
a. The temporal method
b. The current rate method
c. The current/non-current method
d. The monetary/non-monetary method
e. The non-current method