Advanced Accounting Chapter 10 and 11 EXAM 100% SOLVED

Advanced Accounting Chapter 10 and 11 EXAM 100% SOLVED 1. Foreign currency transactions not involving a hedge should be accounted for using: a. the one-transaction method. b. the two-transaction method. c. a hybrid of the one- and two-transaction methods. d. either the one- or the two-transaction method (allowed by the FASB). - ANSWERB A U.S. firm has purchased, for 50,000 FCs, an electric generator from a foreign firm. The exchange rates were 1 FC = $0.80 on the delivery date and 1 FC = $0.76 when the payable was paid. What is the final recorded value of the generator if the two-transaction method is used? a. $40,000 b. $38,000 c. $42,000 d.$50,000 - ANSWERA A U.S. manufacturer has sold goods to a foreign firm for a sale price of 80,000 FC on 12/15/X1. The invoice is due 1/15/X2. The U.S. Firm fiscal year is 12/31/X1. Given the following exchange rates, what gain or loss would the U.S. firm record on 12/31?12/151FC = $0.60 US Dollars12/311FC = $0.65 US Dollars1/151FC = $0.63 US Dollars a. loss of $4,000 b. loss of $1,600 c. gain of $2,400 d. gain of $4,000 - ANSWERD . On August 1, 20X1, an American firm purchased a machine costing 200,000,000 yen from a Japanese firm to be paid for on October 1, 20X1. Also on August 1, 20X1, the American firm entered into a contract to purchase 200,000,000 yen to be delivered on October 1, 20X1, at a forward rate of 1 Yen = $0.00783. The exchange rates were as follows: Spot August 1, 20X11 Yen = $0.00781August 31, 20X11 Yen = $0.00777October 1, 20X11 Yen = $0.00779Which of the following statements is incorrect concerning t