Question

Homestyle Brands imports materials from other countries and exports nished products to customers throughout the world....

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.

Homework Answers

Answer #1
  • All working forms part of the answer itself.

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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