Acctg Solution Chapter 19

Chapter 19 Problem I 1.

Indirect Exchange Rates Philippine Viewpoint: 1 $ = P40; 1 Peso = $0.025 ($1/P40) 1 Singapore dollar = P32.00; 1 Peso = 0.03125 Singapore (1 Singapore Dollar/P32)

2.

FCU

=

Peso Direct Exchange Rate

=

P8,000 P40.00

=

$200; or

= P8,000 x $1/P40 = $200 3.

4,000 Singapore dollars x P32 = P128,000

Problem II a. Exchange rates:

Direct Exchange Rate

Indirect Exchange Rate

Arrival Date

Departure Date

1 Singapore dollar = P33.00

1 Singapore Dollar = P32.50

(P33,000 / 1,000 Singapore dollars)

(P3,250 / 100 Singapore dollars)

P1.00 = .03 Singapore dollars

P1.00 = .03 Singapore dollars

(1,000 Singapore dollars / P33,000)

(100 Singapore dollars / P3,250))

2.

The direct exchange rate has decreased. This means that the peso has strengthened during Mr. Alt's visit. For example, upon arrival, Mr. Alt had to pay P33 per each dollar. Upon departure, however, each dollar is worth just P32.50. This means that the relative value of the peso has increased or, alternatively, the value of the dollar has decreased.

3.

The Philippine peso equivalent values for the 100 Singapore dollars are: Arrival date 100 dollars x P33.00 = Departure date 100 dollars x P32.50 = Foreign Currency Transaction Loss

P3,300 3,250 P 50

Mr. Alt held dollars for a time in which the dollars was weakening against the peso. Thus, Mr. Alt experienced a loss by holding the weaker currency.

Problem III 1. If the direct exchange rate increases, the peso weakens relative to the foreign currency unit. If the indirect exchange rate increases, the peso strengthens relative to the foreign currency unit. 2.

Transaction Importing Importing

Settlement Currency

Direct Exchange Rate Increases

Indirect Exchange Rate Increases

Decreases

NA L

NA G

NA G

NA L

NA G

NA L

NA L

NA G

Purchases…………………….. Accounts payable ($24,000 x P40.55)………………………………

973,200

Exporting Exporting

Peso

Decreases

LCU Peso LCU

Problem IV 1. December 1, 20x4 (Transaction date): 973,200

December 31, 20x4 (Balance sheet date): Foreign currency transaction loss….………………….. Accounts payable [$24,000 x (P40.80 – P40.55)]……… Accounts payable valued at 12/31 Balance Sheet ($24,000 x P40.80)……… Accounts payable valued at 12/1 Date of Transaction ($24,000 x P40.55)……… Adjustment to accounts payable needed………..

6,000 6,000

P979,200 973,200 P 6,000

March 1, 20x5 (Settlement date): Accounts payable………………… Foreign currency transaction gain [$24,000 x (P40.80 – P40.65)] Cash ($24,000 x P40.65)…………….

979,200 3,600 975,600

2. a. a.1. None – transaction date (December 1, 20x4) a.2. P6,000 loss a.3. P3,600 gain (March 1, 20x5) b. b.1. P979,200 – spot rate on the balance sheet date or current rate on the balance sheet b.2. P973,200 – spot rate on the transaction date or historical rate on the balance sheet date. Problem V 1. December 1, 20x4 (Transaction date): Accounts receivable ($60,000 x P40.00)……………………………… Sales

2,400,000 2,400,000

December 31, 20x4 (Balance sheet date): Accounts receivable……….. Foreign currency transaction gain [$60,000 x (P40.70 – P40.00)] Accounts receivable valued at 12/31 Balance Sheet ($60,000 x P40.70)……… Accounts receivable valued at 12/1 Date of Transaction ($60,000 x P40.00)……… Adjustment to accounts receivable needed………..

42,000 42,000

P2,442,000

P

2,400,000 42,000

March 1, 20x5 (Settlement date): Cash ($60,000 x P40,60)……………….. Foreign currency transaction loss……… Accounts receivable ($60,000 x P40.70)……….

2,436,000 6,000 2,442,000

2. a. a.1. None – transaction date a.2. P42,000 gain a.3. P6,000 loss (March 1, 20x5) b. b.1. P2,442,000 – spot rate on the balance sheet date or current rate on the balance sheet b.2. P973,200 – spot rate on the transaction date or historical rate on the balance sheet date. Problem VI The entries to record these transactions and the effects of changes in exchange rates are as follows: November 1, 20x4 (Transaction date): Equity investment (FVTPL)/Financial Asset …………… Cash

3,840,000 3,840,000

To record the purchase of shares in Pineapple Computers at a cost of $96,000 at the exchange rate of P40.

December 10, 20x4 (Transaction date): Equipment ………………………… Cash

636,000 636,000

To record the purchase of equipment costing 12,000 euros at the exchange rate of P53.

December 31, 20x4 (Balance sheet date): Equity investment (FVTPL)/Financial Asset …………… Unrealized gain in fair value of equity investment (financial asset) To record gain in fair value of Pineapple Computer’s share. 12/31/x4: Revalued Investment and translated at the rate on the date of revaluation (closing/current rate): (1,200 units x $100 x P40.50)……………. 11/1/x4: Investment, cost (1,200 units x $80 x P40.00) Unrealized gain on equity investment Less: Foreign currency transaction gain – equity investment

1,020,000 1,020,000

P4,860,000 3,840,000 P1,020,000

11/1/20x4: Date of transaction (1,200 units x $80 x P40).. Less: 12/31/20x4: B/S Date (1,200 units x $80 x P40.50)…. Other unrealized gain in the fair value of equity investment...

P3,840,000 3,888,000

Foreign currency transaction loss….………………….. Accounts payable [$96,000 x (P53.20 – P53)]………

48,000 P 972,000

19,200 19,200

To record exchange loss on accounts payable in euros.

Accounts payable valued at 12/31 Balance Sheet (1,200 x $80 x P53.20)……… Accounts payable valued at 12/1 Date of Transaction (1,200 x $80 x P53.00)……… Adjustment to accounts payable needed………..

5,107,200

P

5,088,000 19,200

February 3, 20x5 (Settlement date): Accounts payable………………… Foreign currency transaction loss [$96,000 x (P53.80 – P53.20)] Cash ($96,000 x P53.80)…………….

5,107,200 57,600 5,164,800

To record exchange loss on accounts payable in euros and settlement of accounts payable in euros at the spot rate of P53.80.

Note the following:  The investment in Pineapple Computers, Inc shares is a non-monetary item that is carried at fair value as it is classified as equity investment through profit or loss (or a financial asset – FVTPL refer PFRS 9). The investment is revalued and translated at the rate on the date of revaluation, that is, December 31, 20x4.  The equipment is translated at the spot rate at the date of purchase and, being a non-monetary item, is carried at cost. It is not adjusted for the change in the exchange rate at balance sheet date. The accounts payable in euros is a monetary item and is remeasured using the cu rr ent / closing rate at balance sheet date. The exchange loss is expensed off to the income statement Problem VII 1. May 1

Inventory (or Purchases) Accounts Payable Foreign purchase denominated in pesos

8,400

June 20

Accounts Payable Cash Settle payable.

8,400

July 1

Accounts Receivable Sales Foreign sale denominated in pesos

10,000

August 10

Cash Accounts Receivable Collect receivable.

10,000

8,400

8,400

10,000

10,000

2.

May 1

Inventory (or Purchases) Accounts Payable (FC1) Foreign purchase denominated in yen: P8,400 / P.0070 = FC1 1,200,000

June 20

Foreign Currency Transaction Loss Accounts Payable (FC1) Revalue foreign currency payable to peso equivalent value: P9,000 = FC1 1,200,000 x P.0075 June 20 spot rate - 8,400 = FC1 1,200,000 x P.0070 May 1 spot rate P 600 = FC1 1,200,000 x (P.0075 - P.0070) Accounts Payable (FC1) Foreign Currency Units (FC1) Settle payable denominated in FC1.

July 1

Accounts Receivable (FC2) Sales Foreign sale denominated in foreign currency 2 (FC 2) FC3: P10,000 / P.20 = FC2 50,000

August 10

Accounts Receivable (FC2) Foreign Currency Transaction Gain Revalue foreign currency receivable to U.S. dollar equivalent value: P 11,000 = FC2 50,000 x P.22 Aug. 10 spot rate - 10,000 = FC2 50,000 x P.20 July 1 spot rate P 1,000 = FC2 50,000 x (P.22 - P.20) Foreign Currency Units (FC2) Accounts Receivable (FC2 Receive FC 2 in settlement of receivable

8,400

8,400

600

600

9,000

9,000

10,000

10,000

1,000

1,000

11,000

11,000

Problem VIII 1. Denominated in FC RR Imports reports in Philippine pesos:

Direct Exchange Rate 2.

12/1/x4

12/31/x4

1/15/x5

Transaction Date

Balance Sheet Date

Settlement Date

P.70

P.66

P.68

December 1, 20x4 Inventory (or Purchases) Accounts Payable (FC) P10,500 = FC 15,000 x P.70

10,500

10,500

December 31, 20x4 Accounts Payable (FC) Foreign Currency Transaction Gain Revalue foreign currency payable to equivalent peso value: P 9,900 = FC 15,000 x P.66 Dec. 31 spot rate -10,500 = FC 15,000 x P.70 Dec. 1 spot rate P 600 = FC 15,000 x (P.66 - P.70)

600

January 15, 20x5 Foreign Currency Transaction Loss Accounts Payable (FC) Revalue payable to current peso equivalent P10,200 = FC 15,000 x P.68 Jan. 15, 20x5, value - 9,900 = FC 15,000 x P.66 Dec. 31, 20x4, value P 300 = FC 15,000 x (P.68 - P.66)

300

Accounts Payable (FC) Foreign Currency Units (FC) P10,200 = FC 15,000 x P.68 Accounts Payable (FC) (FC 15,000 x P.70) 600 (FC 15,000 x P.66)

AJE 12/31/x4

1/15/x5 Settlement

10,200

(FC 15,000 x P.68)

10,200

300

10,200

12/1/x4

10,500

Bal 12/31/x4 AJE 1/15/x5 Bal 1/15/ x5

9,900 300 10,200

Bal 1/16/x5

Problem IX 1. December 31, 20x6 Accounts Receivable (FC1) Foreign Currency Transaction Gain Adjust receivable denominated in FC1 to current peso equivalent and recognize exchange gain: P83,600 = FC475,000 x P.176 Dec. 31 spot rate - 73,600 = Preadjusted Dec. 31, 20x6, value P10,000

2.

600

-0-

10,000

Accounts Payable (FC2) Foreign Currency Transaction Gain Adjust payable denominated in foreign currency to current peso equivalent and recognize exchange gain: P175,300 = Preadjusted Dec. 31, 20x6, value - 170,100 = FC2 21,000,000 x P.0081, Dec. 31 spot rate P 5,200

5,200

Accounts Receivable (FC1) Foreign Currency Transaction Gain Adjust receivable denominated in FC1

1,900

10,000

5,200

1,900

to equivalent peso value on settlement date: P85,500 = FC1 475,000 x P.180 20x7 collection date value - 83,600 = FC1 475,000 x P.176 Dec. 31, 20x6, spot rate P 1,900 = FC1 475,000 x (P.180 - P.176) Cash Foreign Currency Units (FC1) Accounts Receivable (FC1) Accounts Receivable (P) Collect all accounts receivable. 3.

164,000 85,500

Accounts Payable (FC2) Foreign Currency Transaction Gain Adjust payable to equivalent peso value on settlement date: P163,800 = FC2 21,000,000 x P.0078 20x7 payment date value - 170,100 = FC2 21,000,000 x P.0081 Dec. 31, 20x6, spot rate P 6,300 = FC2 21,000,000 x (P.0078 - P.0081) Accounts Payable (P) Accounts Payable (FC2) Foreign Currency Units (FC2) Cash Payment of all accounts payable.

6,300

86,000 163,800

4.

Transaction gain on FC: December 31, 20x6 December 31, 20x7 Overall

P10,000 1,900 P11,900

gain gain gain

5.

Transaction gain on FC2: December 31, 20x6 December 31, 20x7 Overall

P 5,200 6,300 P11,500

gain gain gain

5.

Overall foreign currency transactions gain: Gain on FC1 transaction Gain on FC2 transaction

85,500 164,000

6,300

163,800 86,000

P11,900 11,500 P23,400

CDL could have hedged its exposed position. The exposed positions are only those denominated in foreign currency units. The accounts receivable denominated in FC1 could be hedged by selling FC1 in the forward market, thereby locking in the value of the FC1. The accounts payable denominated in FC2 could be hedged by buying FC2 in the forward market, thereby locking in the value of the FC2.

Problem X Accounts Receivable

Accounts Payable

Foreign Currency Transaction Exchange Loss

Foreign Currency Transaction Exchange Gain

Case 1

NA

P16,000(a)

NA

P2,000(b)

Case 2

P38,000(c)

NA

NA

P2,000(d)

Case 3

NA

P27,000(e)

P3,000(f)

NA

Case 4

P6,250(g)

NA

P1,250(h)

NA

(a) (b) (c) (d) (e) (f) (g) (h)

LCU 40,000 x P.40 LCU 40,000 x (P.40 - P.45) LCU 20,000 x P1.90 LCU 20,000 x (P1.90 - P1.80) LCU 30,000 x P.90 LCU 30,000 x (P.90 - P.80) LCU 2,500,000 x P.0025 LCU 2,500,000 x (P.0025 - P.003)

Multiple Choice Problems 1.

c

2.

d

C$1 / P.90 (C$1.11 = P1.00) P.4895 P.4845

3.

4.

b

d

x x

FC30,000 FC30,000 Gain

d

P.4845 P.4945

x x

FC30,000 FC30,000 Loss

January 15 Foreign Currency Units (LCU) Exchange Loss Accounts Receivable (LCU) Collect foreign currency receivable and recognize foreign currency transaction loss for changes in exchange rates: P300,000 = (LCU 900,000 / LCU 3) Jan. 15 value - 315,000 = Dec. 31 Peso equivalent P 15,000 Foreign currency transaction loss P120,000 P140,000

= =

-105,000

=

P(35,000) 5.

20x4 P14,685 14,535 P 150

P280,000 -240,000 P 40,000

= =

300,000 15,000

20x5 P14,535 14,835 P (300)

315,000

July 1, 20x4, Peso equivalent value December 31, 20x4, Peso equivalent value (LCU 840,000 / P140,000) = LCU 6 / P1 July 1, 20x5, Peso equivalent value (LCU 840,000 / 8) = P105,000 Foreign currency transaction loss July 1, 20x5, Peso equivalent value December 31, 20x4, Peso equivalent value Foreign currency transaction loss

6. c P4,000 AJE

Accounts Payable (FCU) (200,000 x P.4875) 12/10/x4 4,000 (200,000 x P.4675) 12/31/x4

Accounts Payable (FCU) Foreign Exchange Gain

4,000

97,500 93,500

4,000

7. d P27,000 = P6,000 + P20,000 + P1,000 Accounts Payable (FCU) 1/20/x4 AJE

90,000 6,000

3/20/x4 Foreign Exchange Loss Accounts Payable (FCU)

96,000

6,000

6,000

Notes Payable (FCU) 7/01/x4 AJE 12/31/x4 20,000

Foreign Exchange Loss Notes Payable (FCU)

Interest expense Interest Payable (FCU)

10/15/x4 AJE 11/16/x4

20,000

Interest Payable (FCU) (FCU500,000 x .10 x 1/2 year) AJE 12/3/x4 25,000

Foreign Exchange Loss Interest Payable (FCU) 8. c P5,000

500,000 20,000 520,000

25,000 1,000 26,000 25,000

1,000

1,000

Accounts Receivable (FCU) 100,000 5,000 105,000

Settlement

Accounts Receivable (FCU) Foreign Exchange Gain

11/16/x4 5,000

105,000

5,000

Note: The receivable is recorded on October 15, 20x4, when the goods were shipped, not on September 1, 20x4, when the order was received. 9. b P1,000

Accounts Payable (FCU) x4 AJE

500

X5 AJE

1,000

Settlement

4,500

(10,000 x P.60)

4/08/x4

6,000

(10,000 x P.55)

12/31/x4

5,500

(10,000 x P.45)

3/01/x5

4,500

Bal. 1,000

-0-

X5 AJE Accounts Payable (FCU) Foreign Exchange Gain 10.

b

1,000

P9,000 = 300,000 FCUs x (P1.65 - P1.62). The foreign currency transaction gain is computed using spot rates on the transaction date (November 30, 20x4) and the balance sheet date (December 31, 20x4). The forward exchange rates are not

used because the transaction was not hedged. 11. b Cash collected (spot rate date of settlement): 900,000 LCU x P.3333 = P300,000 12. d 20x4: (P.5395 – P.5445) loss x 70,000 FCU = P350 loss 20x5: (P.5445 - .P5495) loss x 70,000 FCU = P350 loss 13. c – Date of transaction (7/7) Balance sheet date (8/31) Foreign exchange currency gain per FCU Multiplied by: No. of FCU

Foreign exchange currency gain

P

2.08 2.05 P .03 350,000 P 10,500

14. b Date of transaction (7/3) Balance sheet date (8/31) Foreign exchange currency gain per FCU Multiplied by: No. of FCU

Foreign exchange currency gain

P

1.58 1.55 P .03 375,000 P 11,250

15. b – The value of the asset acquired should be the spot rate on the date of transaction, i.e. P-80. Therefore, the final recorded value of the electric generator should be P40,000 (P.80 x 50,000 FCs) 16. a Date of transaction Date of settlement Foreign exchange currency gain per FCU Multiplied by: No. of FCU Foreign exchange currency gain

P

.75 .80 P .05 200,000 P 10,000

17. d Date of transaction (12/15) Balance sheet date (12/31) Foreign exchange currency gain per FCU Multiplied by: No. of FCU Foreign exchange currency gain

P

.60 .65 P .05 80,000 P 4,000

Date of transaction (11/30) Balance sheet date (12/31) Foreign exchange currency gain per FCU Multiplied by: No. of FCU Foreign exchange currency gain

P

Date of transaction (11/30) Balance sheet date (12/31) Foreign exchange currency gain per FCU Multiplied by: No. of FCU Foreign exchange currency gain

P

18. b 1 .65 1.62 P .03 300,000 P 9,000

19. b 1.49 1.45 P .04 500,000 P 20,000

20. a Date of arrival (P1,000 / 480,000 FC) Date of departure (P100/50,000 FC) Foreign exchange currency loss per FCU Multiplied by: No. of FCU Foreign exchange currency loss

P .00208 .00200 P .00008 50,000 P 4

Date of transaction (10/1) Balance sheet date (12/31) Foreign exchange currency gain per LCU Multiplied by: No. of LCU Foreign exchange currency gain

P

Date of transaction (11/2) Balance sheet date (12/31) Foreign exchange currency gain per LCU Multiplied by: No. of LCU Foreign exchange currency gain

P

Date of transaction (9/3) : P17,000 / P.85 = 20,000 FC Date of settlement (10/10) Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P

Date of transaction (3/1) : P31,000 / P.31 = 100,000 FC Date of settlement (5/10) Foreign exchange currency gain per FC Multiplied by: No. of FC Foreign exchange currency gain

P

Date of transaction (12/5) Balance sheet date (12/31) Foreign exchange currency gain per FC Multiplied by: No. of FC Foreign exchange currency gain

P

Balance sheet date (12/31) Date of settlement (1/10) Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P

21. b 1.20 1.10 P .10 5,000 P 500

22. d 1. 08 1.10 P .02 23,000 P 460

23. a . 85 .90 P .05 20,000 P 1,000

24. b . 31 .34 P .03 100,000 P 3,000

25. a .265 .262 P .003 100,000 P 300

26. d .262 .264 P .002 100,000 P 200

27. c Foreign exchange currency gain (No. 25) Foreign exchange currency loss (No. 26) Overall gain , net

P _ P

300 200 100

or, Date of transaction (12/5) Date of settlement (1/10) Foreign exchange currency gain per FC Multiplied by: No. of FC Foreign exchange currency gain

P

.265 .264 P .001 100,000 P 100

28. c 9/5: Original forward rate or 90-day forward rate 12/2: Date of expiration of the contract (assumed) since the term “spot rate” was used Foreign exchange currency gain per FC Multiplied by: No. of FC Foreign exchange currency gain

P

.1850

.1865 .0015 100,000 P 150 P

It should be noted that since, the forward contract was not designated as a hedge, offsetting of gain or loss on the hedged item and hedging instrument is not allowed. Therefore, the foreign exchange gain due to revaluation of receivable from foreign currency receivable arising from forward contract will be reported separately, instead of being netted against the exchanges loss of P300 [(P.1865 – P.1835) x 100,000 FCs.]

29. c – the question is related to purchase transaction or exposed liability, therefore the payment of the liability is equivalent to the spot rate on the date of settlement. 30. b 20x4 Date of transaction (12/1/20x4) Balance sheet date (12/31/20x4) Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P

.0095 .0096 P .0001 1,000,000 P 100

20x5 Balance sheet date (12/31/20x4) Date of settlement (1/10/20x5) Foreign exchange currency gain per FC Multiplied by: No. of FC Foreign exchange currency gain

P

.0096 .0094 P .0002 1,000,000 P 200

31. c Balance sheet date (12/31/20x4) Date of settlement (7/1/20x5) Foreign exchange currency loss

P125,000 140,000 P 15,000

32. b – any gain or loss on foreign currency should be considered ordinary. 33. d 1/1: Original forward rate or 60-day forward rate 3/1: Date of expiration of the contract Foreign exchange currency gain per FC

P P

.940 .930 .010

Multiplied by: No. of FC Foreign exchange currency gain

100,000 P 1,000

It should be noted that since, the forward contract was not designated as a hedge, offsetting of gain or loss on the hedged item and hedging instrument is not allowed. Therefore, the foreign exchange gain due to revaluation of payable to foreign exchange dealer arising from forward contract will be reported separately, instead of being netted against the exchanges loss of P1,500 [(P.945 – P.93) x 100,000 FCs.]

34. c It was assumed that the forward contract was designated as a hedging instrument. Hedged Item: Exposed Asset (Receivable) 1/1: Date of transaction – spot rate 12/31: Balance sheet date Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P

.945 .930 P .015 100,000 P 1,500

P 1,500

Forward Contract/Hedging Instrument: 1/1: Original forward rate or 60-day forward rate 3/1: Date of expiration of the contract Foreign exchange currency gain per FC Multiplied by: No. of FC Foreign exchange currency gain Net loss

P

.940 .930 P .010 100,000 P 1,000 P

1,000 500

35. d It was stated in the requirement that the forward contract will not be used, therefore, only the loss on hedged item will be recognized. Hedged Item: Exposed Asset (Receivable) 1/1: Date of transaction – spot rate 12/31: Balance sheet date Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P

.945 .930 P .015 100,000 P 1,500

36. d Date of transaction (4/8) : P1 / .65 FC (direct quote) Date of settlement (5/8): P1/ .70 FC (direct quote) Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P

1.54 1.43 P .11 35,000 P 3,850

37. d – the amount of sales should be the spot rate on the date of transaction (or the balance sheet date - historical rate). I.e., P1.7241 x 10,000 FCs = P17,241. 38. e 1/1: Date of transaction – spot rate 12/31: Balance sheet date Foreign exchange currency gain per FC Multiplied by: No. of FC Foreign exchange currency gain

P 1.7241 1.8182 P .0941 10,000 P 941

39. b Balance sheet date (12/31/20x4) Date of settlement (1/30/20x5) Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P P P

1.8182 1.6666 .1516 10,000 1,516

40. a – since accounts payable is an exposed account meaning their value will fluctuate based on the spot exchange rates, the value of the accounts payable should be the value on May 8, i.e., the spot rate of P1.25 (P.15 x 2,000,000 FCs = P2,500,000). 41. c 5/8: Date of transaction – spot rate 5/31: Balance sheet date Foreign exchange currency loss per FC Multiplied by: No. of FC Foreign exchange currency loss

P

1.25 1.26 P 0.01 2,000,000 P 20,000

42. e – in a two-transaction approach, the recognition of foreign exchange gain or loss is separate from the settlement, therefore, the amount of accounts payable to be settled should be the spot rate on the settlement date, i.e., P1.20 (P1.20 x 2,000,000 FCs = P2,400,000) 43. a Balance sheet date (12/31/20x4) Date of settlement (3/2/20x5) Foreign exchange currency loss

P8,000 6,900 P 1,100

44. d 4/8/20x3: Date of transaction 12/31/20x3: Balance sheet date Foreign exchange currency loss

P 97,000 103,000 P 6,000

Balance sheet date (12/31/20x3) Date of settlement (4/2/20x4) Foreign exchange currency loss

P103,000 105,000 P 2,000

45. d

Theories 1. False 2. False 3. True 4. False 5. True

6. 7. 8. 9. 10,

True False True False True

11. 12. 13. 14. 15.

True D C C B

16. 17. 18. 19. 20.

d d c b a

21. 22. 23. 24. 25.

c b a d b

26. 27. 28. 29. 30.

d b d a

31. 32. 33. 34. 35.

c d d b b

36 37. 38. 39.

b d c a