Afar2 - Foreign Currency

PROBLEM 19 - 1
Import Computers, Inc.
Purchase price - Liabilit
Date of purchase
Dec. 31 [reporting date
ANSWER: D.
PROBLEM 19 - 2
Pinoy Company
Sale price - Asset - FC d
Date of purchase
ANSWER: C.
PROBLEM 19 - 3
Wheels Inc.
Date of purchase
Sep. 30 [quarter-end]
Dec. 31 [quarter-end]
ANSWER: D.
PROBLEM 19 - 4
Great Corporation
Actual payment in LCU
LESS: Initial price in LCU
Increase in LCU payable
Initial loan in LCU

MULTIPLY BY: Annual interest
MULTIPLY BY: Years passed
Accrued interest in LCU
Principal - latest
ADD: Accrued interest - lates
Carrying amount of loan i
LESS: Initial principal
Initial accrued interest
Forex loss from foreign
ADD: Forex loss from import
Total forex loss
ANSWER: C.
PROBLEM 19 - 5
Abu Sayap Company
Date of purchase
Settlement date
ANSWER: A.
PROBLEM 19 - 6
Export Company
Receivable in foreign de
MULTIPLY BY: LC per FC
Settlement amount in L
direct debit to cash
Latest conversion of acc

LESS: Settlement amount in L
Decrease in amount rec
profit or loss
ANSWER: B.
PROBLEM 19 - 7
Sulu Company
Date of purchase
Settlement date
ANSWER: A.
PROBLEM 19 - 8
Durian Export Company
Sale price in FC
Sale price in LC to be re
ANSWER: A.
PROBLEM 19 - 9
Sweet Tooth Company
Purchase price in FC
Cost in LC to be reporte
ANSWER: C.
PROBLEM 19 - 10
Reyna Company
Latest exchange rate
LESS: Previous rate
(Decrease) in rate
Forw. Contr. Receivable

MULTIPLY BY: (Decrease) in rate
Decrease in receivable
loss - decrease in receiv
ANSWER: B.
PROBLEM 19 - 11
Import Company
Forw. Contr. Rec. - for p
Date of purchase
Dec. 31 - according to 3
November 2, 2017 to Ja
90-day forward rate is u
December 31, 2017 to J

30-day forward rate is u
Gains or losses on foreig
ANSWER: D.
PROBLEM 19 - 12
Luzon Corporation
Purchase price in FC
Purchase price settled [
Forw. Contr. Receivable

Credit to Forw. Contr. R
LESS: Purchase price settled [
Forex loss [debit] - sett
There were no changes
ANSWER: B.
PROBLEM 19 - 13
Rustan Corporation

Date of purchase
Forw. Contr. Receivable -
Date of purchase
Dec. 31
Net gain (loss)
ANSWER: D.
PROBLEM 19 - 14
Tony Tan
Date of purchase
Dec. 31
Settlement
Net gain (loss)
ANSWER: B.
PROBLEM 19 - 15
Datu Corporation
Date of sale
Dec. 31
ANSWER: A.
PROBLEM 19 - 16
Hari Company
Date of purchase
Dec. 31
ANSWER: B.
PROBLEM 19 - 17
Pinoy, Inc.
[1.] Payment
MULTIPLY BY: Spot rate
Payment
Purchase
Purchase
LESS: Payment
Balance
FC
LESS:

Payment of balance
Balance payable
LESS: Actual payment
(Over)payment - loss
ANSWER: A.
[2.]
Increase in value - gain
ANSWER: A.
[3.] Purchase
ANSWER: C.
PROBLEM 19 - 18
Maya Company
For. Cur. Loc. Cur. Inc. (Dec.)
Purchase price - Liability - FC denom. 200,000
Date of purchase 2.22 per LC [division] 90,090 -
Dec. 31 [reporting date] 2.70 per LC [division] 74,074 -16,016
Rounded: -16,000 gain - decrease in payable

Sale price - Asset - FC denom. 1,500,000
Date of purchase 0.45 per FC [multipl.] 675,000 -
Dec. 31 [reporting date] 0.47 per FC [multipl.] 705,000 30,000 gain - increase in receivable

Date of purchase 5.61 per FC [multipl.] 1,122,000 -
Sep. 30 [quarter-end] 5.59 per FC [multipl.] 1,118,000 -4,000 gain - decrease in payable
Dec. 31 [quarter-end] 5.62 per FC [multipl.] 1,124,000 6,000 loss - increase in payable
Actual payment in LCU 608,000
Initial price in LCU -600,000
Increase in LCU payable - forex loss 8,000
Initial loan in LCU 3,000,000

Annual interest 10%
Years passed [09/01 - 12/31] 4/12
Accrued interest in LCU, initial equivalent 100,000
Principal - latest 3,200,000

Accrued interest - latest 120,000
Carrying amount of loan in latest equivalent 3,320,000
Initial principal -3,000,000
Initial accrued interest -100,000
Forex loss from foreign loan 220,000
Forex loss from import 8,000
Total forex loss 228,000

Date of purchase 0.018 per LC [division] 555,556 -
Dec. 31 [reporting date] 0.017 per LC [division] 588,235 32,680 loss - increase in payable
Settlement date 0.020 per LC [division] 500,000 -88,235 gain - decrease in payable
Receivable in foreign denomination 900,000
1/3
Settlement amount in LC 300,000
direct debit to cash
Latest conversion of accounts 315,000

Settlement amount in LC -300,000
Decrease in amount received 15,000
profit or loss

Dec. 31 [reporting date] [2016] 0.4245 per FC [multipl.] 21,225 -250 gain - decrease in payable
Settlement date [2017] 0.43 per FC [multipl.] 21,725 500 loss - increase in payable
Sale price in FC 100,000

spot rate May 1 - date of sale 0.85
Sale price in LC to be reported 85,000
Purchase price in FC 50,000

not forward rate 0.6498
Cost in LC to be reported 32,490
Latest exchange rate forward rate 0.22

Previous rate -0.25
(Decrease) in rate -0.03
Forw. Contr. Receivable - for purchase of FC 100,000

(Decrease) in rate -0.03
Decrease in receivable -3,000
loss - decrease in receivable
Forw. Contr. Rec. - for purchase of FC 1,000,000
Dec. 31 - according to 30-day forward rate 0.0055 per FC [multipl.] 5,500 0
November 2, 2017 to January 30, 2018 spans approximately 3 months or approximately 90 days.
90-day forward rate is used as initial forward rate.
December 31, 2017 to January 30, 2018 spans approximately 1 month or approximately 30 days.
30-day forward rate is used as rate at that date
Gains or losses on foreign currency commitments are always offset by an equal amount.
Purchase price in FC 100,000 Inventory

spot rate May 30, 2017 - date of settlement 1.600 AP
Purchase price settled [debit to foreign currency] 160,000
AP
Forw. Contr. Receivable - for purchase of FC 100,000 Gain
forward exchange rate initial rate 1.650 Cash [FC]
Credit to Forw. Contr. Receivable 165,000
Purchase price settled [debit to foreign currency] -160,000
Forex loss [debit] - settlement of forward contract only 5,000
There were no changes in the forward exchange rate.

Purchase price - Liability - FC denom. 1,000,000
Date of purchase spot rate 6.01 per FC [multipl.] 6,010,000 -
Dec. 31 [reporting date] spot rate 6.16 per FC [multipl.] 6,160,000 150,000 loss - increase in payable
Forw. Contr. Receivable - for purchase of FC 1,000,000
Date of purchase 60-day f. rate 6.06 per FC [multipl.] 6,060,000 -
30-day f. rate 6.07 per FC [multipl.] 6,070,000 10,000 gain - increase in receivable
Net gain (loss) UNTIL 2017 ONLY -140,000
Date of purchase 180-day f. rate 56.50 per FC [multipl.] 282,500 -
56.60 per FC [multipl.] 283,000 500 gain - increase in receivable
Settlement spot rate - Mar. 31 56.32 per FC [multipl.] 281,600 -1,400 loss - cash received less than
Net gain (loss) -900
Forw. Contr. Receivable - for sale of FC 10,000
Date of sale 90-day forward rate 0.78 per LC 7,800 -

30-day forward rate 0.82 per LC 8,200 400 loss - increase in payable
0.93 per FC [multipl.] 93,000 3,000 gain - increase in receivable
FC 50,000
June 1. LC per FC 1.370 rate when delivery was done
LC 68,500
FC 450,000
June 1. LC per FC 1.370 1.350 is the rate at the time of placing the order
LC 616,500
-68,500
LC 548,000
Purchase price 450,000

Payment -50,000
Balance - payable 400,000
July 31. LC per FC 1.385
Payment of balance LC 554,000
Balance payable 548,000

Actual payment -554,000
(Over)payment - loss -6,000
2,600
-1,400
Increase in value - gain 1,200
LC 616,500
gain - decrease in payable
gain - increase in receivable
loss - increase in payable



163,000 Forw. Cont. Rece. 165,000
163,000 Forw. Cont. Pay. 165,000
163,000 Cash [FC] 160,000

3,000 Loss on forward contract 5,000
160,000 Forw. Cont. Rece. 165,000
loss - cash received less than receivable


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Afar2 - Foreign Currency

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PROBLEM 19 - 1

Import Computers, Inc.

Purchase price - Liabilit

Dec. 31 [reporting date

Sale price - Asset - FC d

Dec. 31 [reporting date

Purchase price - Liabilit

Initial loan in LCU

Purchase price - Liabilit

Dec. 31 [reporting date

Latest conversion of acc

Purchase price - Liabilit

Dec. 31 [reporting date

Forw. Contr. Receivable

Forw. Contr. Rec. - for p

December 31, 2017 to J

Gains or losses on foreig

Forw. Contr. Receivable

There were no changes

Purchase price - Liabilit

Dec. 31 [reporting date

Forw. Contr. Receivable -

Net gain (loss)

Net gain (loss)

MULTIPLY BY: Spot rate

Increase in value - gain

Date of purchase 2.22 per LC [division] 90,090 -

Dec. 31 [reporting date] 2.70 per LC [division] 74,074 -16,016

Rounded: -16,000 gain - decrease in payable

For. Cur. Loc. Cur. Inc. (Dec.)

Date of purchase 0.45 per FC [multipl.] 675,000 -

For. Cur. Loc. Cur. Inc. (Dec.)

Date of purchase 5.61 per FC [multipl.] 1,122,000 -

Initial loan in LCU 3,000,000

Principal - latest 3,200,000

For. Cur. Loc. Cur. Inc. (Dec.)

Date of purchase 0.018 per LC [division] 555,556 -

Latest conversion of accounts 315,000

For. Cur. Loc. Cur. Inc. (Dec.)

Date of purchase 0.4295 per FC [multipl.] 21,475 -

Sale price in FC 100,000

Purchase price in FC 50,000

Latest exchange rate forward rate 0.22

Forw. Contr. Receivable - for purchase of FC 100,000

Forw. Contr. Rec. - for purchase of FC 1,000,000

Date of purchase 0.0055 per FC [multipl.] 5,500 -

Dec. 31 - according to 30-day forward rate 0.0055 per FC [multipl.] 5,500 0

Purchase price in FC 100,000 Inventory

There were no changes in the forward exchange rate.

For. Cur. Loc. Cur. Inc. (Dec.)

Forw. Contr. Receivable - for purchase of FC 1,000,000

Date of purchase 60-day f. rate 6.06 per FC [multipl.] 6,060,000 -

Net gain (loss) UNTIL 2017 ONLY -140,000

Forw. Contr. Receivable - for purchase of FC 5,000

Date of purchase 180-day f. rate 56.50 per FC [multipl.] 282,500 -

56.60 per FC [multipl.] 283,000 500 gain - increase in receivable

Net gain (loss) -900

Forw. Contr. Receivable - for sale of FC 10,000

Date of sale 90-day forward rate 0.78 per LC 7,800 -

Forw. Contr. Receivable - for purchase of FC 100,000

Date of purchase 0.90 per FC [multipl.] 90,000 -

0.93 per FC [multipl.] 93,000 3,000 gain - increase in receivable

Purchase price 450,000

Balance payable 548,000