Masters Corp has a 100,000 foreign currency denominated accounts receivable on i
ID: 2529495 • Letter: M
Question
Masters Corp has a 100,000 foreign currency denominated accounts receivable on its books that is due to be collected in on June 30, 2011. The following are the US dollar equivalents for this receivable at various dates:
January 1, 2010 $35,000
March 31,2010 $38,000
April 30, 2010 $34,000
December 31, 2010 $32,000
June 30, 2011 $40,000
What is the FX transaction gain or loss as of the following dates:
a. Quater ending March 31, 2010
b. Month ending April 30, 2010
c. Year ending December 31, 2010
d. Six months ended June 30, 2011
Explanation / Answer
FX transaction gain or loss as of the following dates: Quarter ending March 31,2010 = Dollar value as on March 31,2010 - Dollar value as on Jan.1,2010 = $38000 - $35000 = $3000 (Gain) Month ending April 30,2010 = Dollar value as on April 30,2010 - Dollar value as on March 31,2010 = $34000 - $38000 = -$4000 (Loss) Year ending December 31, 2010 = Dollar value as on Dec.31,2010 - Dollar value as on Jan.1,2010 = $32000 - $35000 = -$3000 (Loss) Six months ended June 30, 2011 = Dollar value as on June 30.2011 - Dollar value as on Dec.31,2010 = $40000 - $32000 = $8000 (Gain)