Homework Answers
1) Calculation of loan principle amount that would appear in statement of financial position are as follows:
On 1st May, 2002
Zhang Ltd. borrowed from a US bank $6million,
Exchange rate as on that day = Cdn$1.09
Therefore, amount in Cdn = $6million * 1.09 = Cdn6.54 million.
On 31st December, 2002
Closing exchange rate = Cdn$1.13
Therefore loan balance as on 31st december, 2002
= $6million * 1.13 = Cdn6.78 million
Therefore, exchange loss on that day
= Cdn6.54 million - Cdn6.78 million
= Cdn0.24 million.
On 31st December, 2003
Closing exchange rate = Cdn$1.11
Therefore loan balance as on 31st december, 2003
= $6million * 1.11 = Cdn6.66 million
Therefore, exchange gain on that day
= Cdn6.78 million - Cdn6.66 million
= Cdn0.12 million.
2a) Calculation of Interest Expense:-
For 31st December, 2002
= $6 million *7.25%* 8months/12months
= $6million *0.0725* 8months/12 months
= $0.29million
Average exchange rate at year end = Cdn$1.11
Therefore interest expense = $0.29million * 1.11 = Cdn0.3219 million.
For 31st December, 2003
= $6 million *7.25%* 12months/12months
= $6million *0.0725* 12months/12 months
= $0.435million
Average exchange rate at year end = Cdn$1.10
Therefore interest expense = $0.435million * 1.10 = Cdn0.4785 million.
2c) Calculation of interest expense gain or loss for 31st december, 2002
= (Interest Expense * exchange rate on 1st may, 2002) - (Interest Expense * exchange rate on 31st december, 2003)
= ($0.29million * 1.09) - ( $0.29 million * 1.11)
= Cdn0.3161 million - Cdn0.3219
= Cdn0.0058 (exchange loss)
Add Answer to:
In order to take advantage of lower U.S. interest rates, Zhang Ltd. borrowed $6 million from...
On 1 May 20X9, All-Man Imports Ltd. (AML) obtained a five-year loan from a major New...
On 1 May 20X9, All-Man Imports Ltd. (AML) obtained a five-year loan from a major New York bank. The loan is for US$20,000,000, bears interest at 8% per annum (paid annually on the loan anniversary date), and matures on 31 December 20X14. AML reports in Canadian dollars. At the date the note was issued, the exchange rate was US$1.00 = Cdn$0.94. On 31 December 20X9, the exchange rate was US$1.00 = Cdn$0.90, and the average exchange rate for the last...
On April 1, 2017, Mendoza Company borrowed 550,000 euros for one year at an interest rate...
On April 1, 2017, Mendoza Company borrowed 550,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017 and will make a second interest payment on March 31, 2018 when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro:...
The following selected transactios and events of Ashmore Ltd. Were completed during the accounting year just ended, 31 December 20X5. Interest rates reflect market rates unless indicated. a. On 1 June, the company borrowed $54,000 in cash from
The following selected transactios and events of Ashmore Ltd. Were completed during the accounting year just ended, 31 December 20X5. Interest rates reflectmarket rates unless indicated.a.On 1 June, the company borrowed $54,000 in cash from the bank on a demand basis. The interest rate was 5% to be paid on the anniversary date of the loan.b.Merchandise was purchased on account; a $20,000, one year 6% interest-bearing note, dated 1 April 20X5, was given to the supplier. Interest is paid when...
Problem 4: (11 marks) (20 minutes) On January 2, 20x0, Chegal Ltd. purchased equipment for $100,000....
Problem 4: (11 marks) (20 minutes) On January 2, 20x0, Chegal Ltd. purchased equipment for $100,000. Chegal had to spend an additional $10,000 for transportation and $15,000 for installation of the equipment. Assume that all of these were paid in cash. The equipment is expected to produce a total of 100,000 widgets over its life of 5 years. The residual value expected at the end of 5 years is $25,000. During 20x0, Chegal produced 19,000 widgets. Required b. Prepare the...
On April 1, 2017, Mendoza Company borrowed 514.000 euros for one year at an interest rate...
On April 1, 2017, Mendoza Company borrowed 514.000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017 and will make a second interest payment on March 31, 2018 when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro...
Q1. Suppose International Retailer, Ltd. (IRL) had inventory in Britain valued at 325,000 pounds one year...
Q1. Suppose International Retailer, Ltd. (IRL) had inventory in Britain valued at 325,000 pounds one year ago. The exchange rate for dollars to pounds was 1 pound = 2 U.S. dollars. This year the exchange rate is 1 pound = 1.82 U.S. dollars. The inventory in Britain is still valued at 325,000 pounds. What is the gain or loss in inventory value in U.S. dollars as a result of the change in exchange rates? Q2.A U.S.-based company, American Construction, Inc.,...
Grand Ltd. Is a Canadian company that had the following transactions in 20X7: a. Sold goods to a customer in Belg...
Grand Ltd. Is a Canadian company that had the following transactions in 20X7: a. Sold goods to a customer in Belgium on 25 November for 225,000 euros. b. Sold goods to a U.S. customer on 25 November for US$81,000. c. Sold goods on 1 December, to a British customer for 145,000 euros. d. On 15 December, the customer in transaction (a) paid. At year-end, the other two accounts receivable were still outstanding. EXCHANGE RATES Canadian Equivalencies 25 November 01 December...
On December 10, 2020, Robin Franchises, a U.S. company, received a purchase order from a U.K....
On December 10, 2020, Robin Franchises, a U.S. company, received
a purchase order from a U.K. customer for delivery of merchandise
on January 15, 2021. The price of the merchandise is £10,000,000,
payable on March 15, 2021, in pounds. To hedge its exposure to
exchange rate changes, on December 10, 2020, Robin entered a
forward contract for delivery of £10,000,000 to the broker on March
15, 2021. The merchandise was delivered as scheduled. On March 15,
2021, Robin received payment...
5. On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of...
5. On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada for 150,000 Canadian dollars (CAD). Collection of the receivable is due on February 1, 2019. Keenan purchased a foreign currency put option with a strike price of $.97 (U.S.) on December 1, 2018. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow: Date Spot Rate Option Premium December 1, 2018 $ 0.97 $ 0.05 December 31, 2018...
Exercise 12-6 Agentel Corporation is a U.S.-based importing-exporting company. The company entered into the following transactions...
Exercise 12-6
Agentel Corporation is a U.S.-based importing-exporting company.
The company entered into the following transactions during the
month of November.
Nov.
6
Purchased merchandise from AGT, a Swiss firm, for 590,000
francs.
5
Sold merchandise to SLS, Inc., a firm located in Rio De
Janeiro, for $190,000.
18
Sold merchandise to TNT, Ltd., a British firm, for 140,000
pounds.
20
Purchased merchandise from SDS, Ltd., a British firm, for
$140,000.
All the transactions were unsettled at December 31, Agentel’s...
On 1 May 20X9, All-Man Imports Ltd. (AML) obtained a five-year loan from a major New York bank. The loan is for US$20,000,000, bears interest at 8% per annum (paid annually on the loan anniversary date), and matures on 31 December 20X14. AML reports in Canadian dollars. At the date the note was issued, the exchange rate was US$1.00 = Cdn$0.94. On 31 December 20X9, the exchange rate was US$1.00 = Cdn$0.90, and the average exchange rate for the last...
Problem 4: (11 marks) (20 minutes) On January 2, 20x0, Chegal Ltd. purchased equipment for $100,000. Chegal had to spend an additional $10,000 for transportation and $15,000 for installation of the equipment. Assume that all of these were paid in cash. The equipment is expected to produce a total of 100,000 widgets over its life of 5 years. The residual value expected at the end of 5 years is $25,000. During 20x0, Chegal produced 19,000 widgets. Required b. Prepare the...
On April 1, 2017, Mendoza Company borrowed 514.000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017 and will make a second interest payment on March 31, 2018 when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro...
Grand Ltd. Is a Canadian company that had the following transactions in 20X7: a. Sold goods to a customer in Belgium on 25 November for 225,000 euros. b. Sold goods to a U.S. customer on 25 November for US$81,000. c. Sold goods on 1 December, to a British customer for 145,000 euros. d. On 15 December, the customer in transaction (a) paid. At year-end, the other two accounts receivable were still outstanding. EXCHANGE RATES Canadian Equivalencies 25 November 01 December...
On December 10, 2020, Robin Franchises, a U.S. company, received
a purchase order from a U.K. customer for delivery of merchandise
on January 15, 2021. The price of the merchandise is £10,000,000,
payable on March 15, 2021, in pounds. To hedge its exposure to
exchange rate changes, on December 10, 2020, Robin entered a
forward contract for delivery of £10,000,000 to the broker on March
15, 2021. The merchandise was delivered as scheduled. On March 15,
2021, Robin received payment...
Exercise 12-6
Agentel Corporation is a U.S.-based importing-exporting company.
The company entered into the following transactions during the
month of November.
Nov.
6
Purchased merchandise from AGT, a Swiss firm, for 590,000
francs.
5
Sold merchandise to SLS, Inc., a firm located in Rio De
Janeiro, for $190,000.
18
Sold merchandise to TNT, Ltd., a British firm, for 140,000
pounds.
20
Purchased merchandise from SDS, Ltd., a British firm, for
$140,000.
All the transactions were unsettled at December 31, Agentel’s...
Most questions answered within 3 hours.
-
A z-score
communicates a raw score’s "relative standing"
under the normal curve in relation to:
asked 10 seconds from now -
An object is vibrating on a spring with the following equation
of motion:
?=(30 ??)cos((2?)/(160)?)
a)...
asked 56 seconds from now -
Vulcan Flyovers offers scenic overflights of Mount St. Helens,
the volcano in Washington State that explosively...
asked 1 minute ago -
If organizations do not adapt fast enough and move incrementally
from the twentieth-century model to the...
asked 2 minutes ago -
A helium balloon with 2.5L of gas has a gauge pressure of 10,000
Pa. The balloon...
asked 6 minutes ago -
What is responsible for Jupiter's enormous magnetic field?
asked 21 minutes ago -
At the end of the year, a company offered to buy 5,000 units of
a product...
asked 23 minutes ago -
Implement C++ program for each of the following.
Let D = [-48, -14, -8, 0, 1,...
asked 43 minutes ago -
Consider a labor market in which LD = 400 – 4W and LS = 250 +...
asked 57 minutes ago -
Let’s say you are teaching a typically-developing young child
how to eat with a spoon. Describe...
asked 40 minutes ago -
Ask Your Teacher A toy gun uses a spring to project a 5.6-g soft
rubber sphere...
asked 52 minutes ago -
*****DO NOT ANSWER THIS QUESTION IF YOU DON'T
KNOW*******
Question - PERSONAL DEVELOPMENT ESSAY and Detailed...
asked 59 minutes ago
> Not sure where you went wrong but it's not right. 2 c) isn't correct. perhaps you meant to make the 1.11 a 1.13 instead? idk.
Captain Kanuck Tue, Sep 27, 2022 4:31 PM