Ask Question
10 March, 11:50

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, mus

+4
Answers (1)
  1. 10 March, 14:23
    0
    2018 Foreign currency gain $9,740.26 million

    2019 Foreign currency gain $13,975.16 million

    Explanation:

    Calculation of foreign currency gain or loss for 2018

    Total amount payable as at 15th Dec $545,454.55 million ($60 million/110)

    Total amount payable as at 31st Dec $535,714.29 million ($60 million/112)

    Foreign currency gain $9,740.26 million ($545,454.55-$535,714.29)

    The amount payable based on 31st December year end exchange rate is lesser than on date of purchase which result in a gain for the company

    Calculation of foreign currency gain or loss for 2019

    Total amount payable as at 31st Dec $535,714.29 million ($60 million/112)

    Total amount actually paid on 02nd Feb $521,739.13 million ($60 million/115)

    Foreign currency gain $13,975.16 million ($535,714.29-$521,739.13)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Honk, Inc. a U. S. corporation, purchases weight-lifting equipment for resale from HiDisu, a Japanese corporation, for 60 million yen. On ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers