Chapter 19 Problem | 1. Indirect Exchange Rates Philippine Viewpoint: 1§= P40: 1 Peso = $0.025 ($1/40) 1 Singapore collar = P32.00; 1 Peso = .03125 Singapore (1 Singapore Doliar/P32) ——_feso _ Pa.000 2 Fou Direc! Exchange Rate ~ paooo ~ $™0:0r 0 8,000 x $1/P40 = $200 3. 4,000 Singopore dollars x P3: 128,000 Problem I @. Excrangerates: Arival Date Departure Date 1 Singapore dollar = P33.00 | 1 Singapore Dollar = P32.50 Direct Exchange Rate | (P33,000/1,000Singapore | (P3,250/ 100 Singapore eclars) dollars} P1.00= 03Singapore dollars | P1.00 = .03 Singapore dollars Indirect ExchangeRate | (1.000Singapore dollars / | (100 Singapore dollars / 33,000) P3,250)) 2. The direct exchange rate hos decreased. Ths means that the peso has strengthened during Mr. Alls visit. For exomple. upon arrival, Mr. Al had to aay P33 per each dollar. Upon’ departure, however, each dollar is worth just P32.50. This Means that the relative value of the peso has increased or, allematively, the value of the dollar has decrecsed. 3. The Philippine peso equivdent values fer the 100 Singapore dollars are: Artival date 100 collars x P33.00 = 3,300 Deporture dale 100 dollars x P32.50 = 3.250 Foreign Curency Transaction Loss B80 Mr. All held dollars for o fime in which the dollors was weakening against the peso. Thus, Mr, All experienced a loss by holding the weaker curency. Scanned with CamScanner| i Problem itt \ 1. If the direct exchange rate increases, the peso weakens relative to the foreign \| currency uni f the indirect exchange rate increases, the peso strengthens relative to the foreign curency unit. Settlement Direct Exchange Rate Indirect Exchange Rate Transaction Cunency _Increases_Decreases_ “increases _ Decreases importing Peso NA NA NA NA importing L G S u wcu Exporting Peso NA NA NA NA Exporting icu cS L L S Problem IV 1 December 1, 20x4 (Transoction datel: Purchases... i T3200 Accoun': sayable (§24 0001 PAD SS]. F520 December 31, 20x4 (Salance shee! date): Foreign currency ironsacion loss 5000 ‘Accounts peyable [$24,000 x (P40.60 ~ Pa0-S5]. 6.000 Accounl: payable valued Gl 12/81 Balance Shect [$24,000 x 940.60) 979.200 “Accounts payable valued GI 12/1 Dale of Transaciion {$24,000 x?40.55).. 973.200 | ‘Adjyslmen! to accounts payable needed... |B -é.0n9| March 1, 20x5 (Settlement date): ‘Accounis payable, _ TI 7H Foreign currency fransaciion qin [824 000 x Pa 80 P40 45 3.200 (Cash (524.000 x P4065). 975.500 2 o. @.1. None ~ transaction date (December 1, 20x4) 2.2. P6,000 loss a3, P3,600 gain (March 1, 20x5) 1. P979,200 - spot rate on the balance sheet date or current rate on the balance sheet 6.2. P973,200 - spot rate on the transaction date or historical rate on the balance sheet date. Problem v 1, December 1. 20x4 {Transaction date): Accounts receivable ($40,000 x P40,00). Soles 2400000 2,400,000. Scanned with CamScannerecember 31,2044 (Bosonce sh Accounts receivable... ‘dete “oreion | “eulronsaction goin [$40,000 x 1P40.70— PASO eee #2000 Accourls receivable valued al ST BAS x {$60,000 x P40,70).. a Beienes Shost P2,442,000 € 208 Balance sheet date (6/31) —— 205 Foreign exchenge curency agin per FCU P03 Mulipled by: No.of FCU 35.000 | Foreign exchonge curency gain 210500] 14, b=The value of the osset acquired should be the spot rate on the dete of transaction, i.e. P-80, Therefore, the final recorded value of the electric generator should be P0,000 {?.80 x 50,000 FCs) 15. Dale of rensaction p75 Dale olsetliement ——20 Foreign exchange curency gon p6rFCU Pos ‘Mulipfied by: No. of FCU [200.000] Foreign exchange curenéy Gon 10.000] 16.4 (Dale of ransaction (12/13) 2 Bolonce sheet date {12/31 5 Foreign exchange currency ain perFCU > _05 Mullipied By: No. of FU i000 Foreign exchange curency sain E4000] v7. Dole of ronscction (11/30) Ps Bolonce sheet date (12/311 Foreign exchange cuwency gain per FEU P03 [ivultipied by: No. of CU 300.000 Foreign exchenge curengy gain [22000] 18.b Dale of ransoction [11/30] Pa Bolonce shee! date (12/31) 1s Foreign exchange currency gain Ber FEU F__o4 Mullipigd 6v:No. of FCU 200.009 Ctoreian exchanoe cunrency gain 220000 19. [ Date of arival (1.000 7 «80.000 FC] P0028 Dale of departure {P100/50.000 FC) 00200 Foreign exchongs currency loss per FU 00008. Mullipie by: No, of FCU 50,000 | Foreign exchange currency 10s zs 20. [Date of transaction [10/1 I [2 129) Scanned with CamScannerBolonce sheet dole (12/31 Foreign exchange curtency agin per CU ‘Mullipied by: No.of LCU Foreign exchange cuency gain 2. Date of rensaction [1172] Pe Balance shee! date (12/31) —Lio Foreign exchange currency aain pecLCU P02 ‘Mulfiplied by: No. of CU 23.000 Foreign exchange cureny ain 2440] 2 Date of ransaction (9/31 =°17.000 P85 = 20,000 FC re Date of settlement (10/10) ——i0} Foreign exchange curency loss parr F_05 Mutiipiod by: No. of FC aco Foreign exchange cunency loss 21.000) 2. Dale of hansaction (12/5) P 265 Balance sheet dale (12/31) 26 Foreign exchange curency gain per FG P03 ‘Mulliptied by: No. of FC aoe Foreign exchange curency gain 2200) 24.4 Balance sheet date [12/31] 262 Date of settiement (1/10), 268] Foreign exchange cuency loss perfC. 002 ‘Multiplied by: No.of FC 1a0.000 Foreign exchange curency loss C2200) 25.¢ Foreian exchange currency aain (No. 25] [> 300 Foreign exchange cunency loss (No. 26) [ 200 ‘Overollgan_ net — or Dole of ransoction [12/5] [F265 Dale of seiliement {1/10} 26 | forsiqn exchonge cunency agin per EC P_001 Muliolied By: No. of FC (00.000 Foreign exchanae curency agin 2100 26. b—cny gain or ss on foreign currency should be considered ordinary. 27.d Pigskin, o Philippine Corporation. Dale of transaction (4/6) “PI / 45°C (direct quote] Pisa Dale of settlement (5/8): P1/ 70 FC {direct quoie] 2 Foreign exchonge cynency [oss per FC eu ‘Multipied by: No. of FC 35,009 | [Foreign exchange curency oss E850 Scanned with CamScanner