A U.S. company purchases a 90-day certificate of deposit from a Singapore bank on May 15,...
A U.S. company purchases a 90-day certificate of deposit from a
Singapore bank on May 15, when the spot rate is $0.72/S$. The
certificate has a face value of S$100,000 and pays interest at an
annual rate of 2 percent. On August 13, the certificate of deposit
matures, and the company receives principal and interest of
S$100,500 and records interest revenue on the investment. The spot
rate on August 13 is $0.75/S$. The average spot rate for the period
May 15 – August 13 is $0.73/S$. The company's accounting year ends
December 31.
Interest income on the investment is reported at:
| A. |
$360 |
|
| B. |
$365 |
|
| C. |
$500 |
|
| D. |
$375 |
Homework Answers
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A U.S. company purchases a 90-day certificate of deposit from a
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