Honk, Inc. a U.S. corporation, purchases weight-lifting equipment for resale from HiDisu, a Japanese corporation, for 60 million yen. On the date of purchase, 110 yen is equal to $1 U.S. (¥110:$1). The purchase is made on December 15, 2018, with payment due in 90 days. Honk is a calendar year taxpayer. On December 31, 2018, the foreign exchange rate is ¥112:$1. On February 2, 2019, the invoice is paid when the exchange rate is ¥115:$1.
What amount of foreign currency gain or loss, if any, must Honk recognize for each year as a result of this transaction?
If required, round your answer to the nearest dollar. If an amount is zero, enter "0".
2018: The foreign exchange gain or loss recognized is $.
2019: The foreign exchange gain or loss recognized is $
Equipment | 60,000,000 | yen | |
Equipment in dollar on purchase date | $ 545,455 | =60,000,000/110 | |
Liability in $ on 31Dec 2018 | $ 535,714 | =60,000,000/112 | |
2018 | Foreign Exchange gain | $ 9,740 | (545455-535714) |
Liability in $ on 2Feb 2019 | $ 521,739 | =60,000,000/115 | |
2019 | Foreign Exchange gain | $ 13,975 | (535714-521739) |
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