Solution-Amount of the foreign exchange gain

Amount of the foreign exchange gain

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Reference no: EM133206316

On July 1^st.2020, X purchased inventory from its main U.S. supplier, Y Ltd. at a cost of US$12,000.

X's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31^st.2020.

Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below:-

Transaction date July 1,2020	US$1.00 =	CDN$1.370
Year end July 31,2020	US$1.00=	CDN$1.345
Settlement date: August 31,2020	US$1.00=	CDN$1.325

What would be the amount of the foreign exchange gain or loss recorded at the settlement date?

a. A CDN $300 exchange gain

b. A CDN $300 exchange loss

c. A CDN $240 exchange gain

d. Nil. Any exchange gain or loss is deferred until settlement.

Reference no: EM133206316

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Amount of the foreign exchange gain

Reference no: EM133206316

Reference no: EM133206316

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