Foreign currency transaction - Direct quotation - Purchase Use the following information for the next six questions: On November 29, 20x1, ABC Co. placed a non-cancellable purchase order for the importation of a machine with a purchase price of €40,000 from a company based in France. The contract term is FOB shipping point. The machine was shipped on December 1, 20x1 and was received by ABC on December 15, 20x1. The purchase price was settled on January 3, 20x2. The following are the exchange rates: 1. The entry on November 29, 20x] includes a. a debit to accounts payable for P2,320,000. b. a credit to machinery for P2,320,000. c. a debit to machinery for P2,320,000 d. none of these 2. The entry on December 1, 20x1 includes a. a debit to accounts payable for P2,320,000. b. a credit to machinery for P2,320,000. c. a debit to machinery for P2,320,000 d. none of these 3. The total FOREX gain (loss) recognized in 20x] is a. 40,000 b. (80,000) c. (200,000) d. (120,000) 4. The adjustment to the machinery account on December 31, 20x1 is - increase (decrease) a. 80,000 b. (80,000) c.40,000 4.0 5. The total FOREX gain (loss) recognized in 20x? is a. (40.000) —b. (80.000) c. (200.000) d. (120.000)6. The net adjustment to the machinery account on January 3, 20x2. is - increase (decrease) a. 80,000 'b, (120,000) c. (40,000) d.0 Foreign currency transaction - Direct quotation - Sale Use the following information for the next four questions: On November 29, 20x1, ABC Co. received a non-cancellable sale order for the exportation of inventories from a UK-based company. The contract price is £40,000 (pound sterling). The contract term is FOB shipping point. The inventories were shipped on December 1, 20x11. The sale was settled on January 3, 20x2. The following are the exchange rates: November 29, 20x: December 1, 20xl.. December 31, 20x1... January 3, 20x2... 7. How much sale revenue is recognized in 20x1? a. 2,680,000 b. 2,720,000 c. 2,800,000 d. 2,840,000 8. How much FOREX gain (loss) is recognized in 20x17 a. 120,000 b. (120,000) c. 80,000 d. (80,000) 9. How much FOREX gain (loss) is recognized in 20x27 a. 40,000 b. (40,000) c. 120,000 d. 160,000 10. How much is the total FOREX gain (loss) resulting from the sale transaction? a. 160,000 b. 120,000 c. 80,000 d. 40,000 Foreign currency transaction - Indirect quotation Use the following information for the next two questions: ABC Co. had the following transactions during the last month of the current reporting period: * Purchased raw materials from Pakistani Co., a company based in Pakistan, for 400,000 rupees on December 17, 20x1 to be settled on January 5, 20x2. * Sold inventory to Swedish Co., a company based in Sweden, for 80,000 kroners on December 20, 20x1 to be settied on January 5, 20x2.The exchange rates are as follows: Rupee Kroner Dec. 17, 20x1. Php 1: PKR 2.04 Dec. 20, 20x1. ...Php 1: SEK 0.1667 Dec. 31, 20x1. PKR 2. Php 1: SEK 0.2000 Jan. 5, 20x2. Php 1: PKR 2.083 Php 1: SEK 0.2400 11. How much are the total FOREX gains/losses recognized by ABC Co. from the purchase and sale transactions described above? Purchase Sales. a. (4,048) 146,570 b. 4,048 (146,572) c. 3,922 (66,667) d. (3,922) 66,667 12. How much are the total FOREX gains/losses recognized by Pakistani Co. and Swedish Co. from the purchase and sale transactions, respectively? Pakistani Swedish a. (4,048) 146,572 b. 3,922 (66,667) c. (3,922) 66,667 d.0 0 Subsequent measurement Use the following information for the next five questions: On December 1, 20x1, ABC Co. acquired equipment for BRL 40,000 (Brazilian reals) when the exchange rate is P24:BRL1. ABC Co. reported foreign exchange loss of P80,000 in its 20x1 statement of profit or loss and a P20,000 foreign exchange gain of P20,000 in its 20x2 statement of profit or loss. 13. What is the exchange rate on December 31, 20x17? a. P24:BRL1 b. P26:BRL1 c. P25.5:BRL1 d. None of these14. What is the exchange rate on settlement date in 20x2? a. P24:BRLL b. P26:BRL1 c. P25.5:BRL1 d. None of these 15. What is the carrying amount of the accounts payable in the 20x1 statement of financial position? a. 1,040,000 b. 960,000 c. 1,020,000 d. None of these 16. How much is the cost of the equipment in the 20x1 statement of financial position? a. 1,040,000 b. 960,000 c. 1,020,000 d. None of these 17. How much is the cost of the equipment in the 20x2 statement of financial position? a. 1,040,000 b. 960,000 c. 1,020,000 d. None of these Exchange rate on initial recognition 18. ABC Co. obtained a $40,000 loan at the middle of the year. At the end of the year, the loan payable is appropriately reported at P2,200,000. None of the principal on the loan has been paid during the year. There has been a 10% increase in the exchange rate (expressed in direct quotation) from the date the loan has been obtained ta the end of reporting period. What is the exchange rate at the date the loan has been obtained? a. P55:$1 b.P50:$1 c.P45:51 d. P60:$1 Loan transaction 19. On July 1, 20x1, ABC Co. obtained a $40,000 loan that bears 10% annual interest when the spot exchange rate is P50:$1. The closing rate on December 31, 20x1 is P55:$1. No payments had been made on the loan during the year. How much is the foreign exchange gain (loss) to be recognized in the year-end statement of profit or loss? a. (200,000) b. (220,000) c. (210,000) d. 210,000Cash account Use the following information for the next two questions: ABC Co., a domestic corporation based in the Philippines, frequently sells goods overseas through the internet. All online sales are on cash basis. The movements in ABC’s US dollar account are shown below: Jan. 1 (P48:$1) 0 Sept. 30 (P45:$1) 20,000 Dec. 16 (P44:$1) '$100,00 OQ Dec. 31 (P45:$1) 20. How much is the balance of cash in bank to be presented in ‘the year-end statement of financial position? a. 4,640,000 b. 4,500,000 ~—c. 100,000 d. 4,650,000 21. What is the net foreign exchange gain (loss) to be recognized in the year-end statement of profit or lass? a. 100,000 b. (100,000) . (140,000) sd. 140,000 Average rate Use the following information for the next two questions: On December 15, 20x1, ABC Co. sent one of its key management personnel to a seminar in Malaysia. ABC Co. advanced MYR 40,000 (ringgits) to the manager subject to liquidation. The exchange rate on December 15, 20x] is P14: MYR1. The liquidation report submitted by the key manager showed the following: + MYR 32,000 were spent from December 15 to December 31, 20x1. The exchange rate on December 31, 20x] is P13: MYR 1. + MYR 6,000 were spent from January 1, 20x2 to January 3, 20x2. The manager returned the MYR 2,000 excess to the cashier on January 3, 20x2. The exchange rate on January 3, 20x2 is P12: MyR 1.22. How much is the total FOREX gain (loss) on December 31, 20x17 a. (24,000) b. (32,000) c. 24.000 d. (38.000) 23. How much is the FOREX gain (loss) on January 3, 20x27 a. (5,000) b. (4,000) c. (7,000) d. (2,000) Items measured at other than historical cost Use the following information for the next two questions: ABC Co. had the following foreign currency transactions during the year: * Acquired equipment on January 1, 20x1 for THB 40,000 (bahts) from a Thailand-based company when the current exchange rate was P1.2: THB 1. The equipment is depreciated over 5 years using the straight-line method. * Purchased inventories on December 1, 20x1 for ZAR 4,000 (rands) from a company based in South Africa when the current exchange rate was P5: ZAR 1. Both the acquisitions described above are on cash basis. At year- end, ABC Co. determined the following: * The equipment was found to have a recoverable amount of THE 28,000. The closing rate is P1.3: THB 1. * Half of the inventories purchased remain unsold. ABC estimated that the net realizable value of the unsold inventories is ZAR 1,200. The closing rate is P6. 24. How much is the impairment loss on the equipment? a. 11,600 b.2,000 = c. 9,280 d. None 25. How much is the impairment loss on the inventory? a. 2,800 b. 800 c.2,240 d. NoneBuying and selling rates Use the following information for the next two questions: ABC Co. had the following foreign currency transactions on April 1, 20x1: * Purchased goods worth CHF 40,000 (francs) from Swiss Company. a company based in Switzerland. * Sold goods with sale price of VEB 4,000 (bolivars) to Venezuelan Company, a company based in Venezuela. Both the transactions were settled on April 30, 20x1. The following were the spot exchange rates: Buying Selling P48: CHFL 50: CHFL Swiss Francs P12: CHFL P16: CHFL 26. How much is the FOREX gain (loss) on the purchase transaction? a. (120,000) b. 120,000 c.80,000 d. (80,000) 27. How much is the FOREX gain (loss) on the sale transaction? a. 16,000 b. 12,000 c. (16,000) d. (12,000) Revaluation of asset 28. On January 1, 20x1, ABC Co. acquired equipment for MWK 4,000,000 (kwachas) from @ company based in Malawi. The equipment's estimated useful life is 4 years. ABC Co. uses the straight line method of depreciation and the revaluation model. On December 31, 20x1, the equipment was determined to have a net appraised value of MWK 4,800,000 (kwachas). The relevant rates are as follows: Jan. 1, 20x1.. Dec. 31, 20x1. How much is the revaluation surplus? a. 648,000 b. 3,461,538 c. 448,000 d. NoneExchange difference recognized in OCI 29. ABC Co. has a wholly-owned subsidiary in Indonesia. The following information is available about the subsidiary for the year to December 31, 20x1: (IDR ~ Rupiahs) 400,000,00 Net assets, Jan. 1, 20x1 0 160,000,00 Profit for the year 0 Dividends : 560,000,00 Net assets, Dec. 31, 20x1 o No goodwill arose from the business combination. The following are the relevant exchange rates: Jan. 1, 20x1..... ‘Average for the year. Dec. 31, 20x1.... ‘How much is the total gain (loss) on translation for the year? a. 1,280,000 b. (1,120,000). 1,120,000 d. 960,000 Goodwill Use the following information for the next two questions: On January 1, 20x1, a Philippine holding company acquired 100% interest in a subsidiary based in Kenya for KES 40M (shillings). The fair value of the net assets of the subsidiary at that date was KES 32 million (shillings). ‘The following are the relevant exchange rates: Jan. 1, 20x1. Dec. 31, 20x1 ‘The group determined that there is no impairment in goodwill. 30. How muchis the goodwill as of January 1, 20x1? a. 100,000 b. 240,000 ¢. 320,000 d. 480,000