How much foreign exchange gain should report

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MNC Corp. (a Philippine-based company) sold parts to a foreign customer on December 1, 20x9, with payment of 10 million foreign currencies to be received on March 31, 20y0. The following exchange rates apply:

Dates Spot Rate

Forward rate

(for 3/31/20y0)

December 1, 20x9 P.0035 P.0034 (4 months)

December 31, 20x9 .0033 .0032 (3 month)

March 31, 20y0 .0038 N/A

Problem 1: MNC's incremental borrowing rate is 12 percent. The present value factor for three months at an annual rate of interest of 12 percent (1 percent per month) is 0.9706. Assuming that MNC entered into no forward contract, how much foreign exchange gain or loss should it report on its 20x9 income statement with regard to this transaction?

Reference no: EM132973517

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