Homestyle Brands imports materials from other countries and exports nished products to customers throughout the world. Information regarding four such transactions occurring in the last accounting period, all denominated in units of foreign currency, is given below:
Country | Amount | Spot Rate at transaction date | Spot Rate at payment date |
---|---|---|---|
Import from Taiwan | 100,000 Taiwan dollars | $0.033 | $0.038 |
Import from Poland | 600,000 zloty | 0.300 | 0.285 |
Export to Brazil | 400,000 reais | 0.421 | 0.403 |
Export to Switzerland | 950,000 Swiss francs | 1.050 | 1.084 |
Calculate gain or loss for each of the four scenarios.
Country |
Amount (A) |
Spot Rate at transaction date (B) |
Dollar required to be paid (C=A x B) |
Spot Rate at payment date (D) |
Dollar paid (E=A x D) |
Exchange gain/(loss) (F= C – E) |
Import from Taiwan |
100,000 Taiwan dollars |
$0.033 |
$3300 |
$0.038 |
$3800 |
$(500) |
Import from Poland |
600,000 zloty |
$0.3 |
$180000 |
$0.285 |
$171000 |
$9000 |
Export to Brazil |
400,000 reais |
$0.421 |
$168400 |
$0.403 |
$161200 |
$7200 |
Export to Switzerland |
950,000 Swiss francs |
$1.05 |
$997500 |
$1.084 |
$1029800 |
$(32300) |
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