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What is the amount of interest paid

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Question - XYZ Corp has a calendar year end. On January 1, 20x0, the company borrowed 5,000,000 Foreign Currency Units (FCU's) from a foreign bank. The loan is to be repaid on December 31, 20x3 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in pesos. XYZ does not hedge to minimize its foreign exchange risk. The following rates were in effect throughout the term of the loan:

January 1, 20x0 FCU 1 = P1.1500

December 31, 20x0 FCU 1 = P1.1490

December 31, 20x1 FCU 1 = P1.1485

December 31, 20x2 FCU 1 = P1.1483

December 31, 20x3 FCU 1 = P1.1487

The average rates in effect for 20x0 and 20x1 were as follows:

Year 20x0 FCU 1 = P1.1493

Year 20x1 FCU 1 = P1.1487

What amount would XYZ record its initial loan liability on January 1, 20x0?

What is the amount of interest paid during 20x0?

What is the amount of interest paid during 20x1?

Reference no: EM132972048

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