1.

A transaction involving foreign currency will mos t likely result in gains

and losses to the reporting entity if the
a. Forward exchange contract is selling at a premium
b. Transaction is denominated and measured in the reporting entity’s currency
c. Translation takes place in a country with a tiered monetary policy
d. Transaction is denominated in a foreign currency and measured in
the reporting entity’s currency

2. A Philippine currency that has purchased inventory from a German

vendor would be exposed to a netexchange gain on the unpaid balance if
the
a. Amount to be paid was denominated in dollars
b. Peso weakened relative to the Euro and the Euro was the denominated
currency
c. Peso strengthened relative to the Euro and the Euro was the
denominated currency
d. Philippine company purchased a forward contract to buy Euros.

3.