Chapter 19

Problem I

1. Indirect Exchange Rates

Philippine Viewpoint: 1 $ = P40; 1 Peso = $0.025 ($1/P40) 1 Singapore dollar = P32.00; 1 Peso = 0.03125 Singapore (1 Singapore

Dollar/P32)

2. FCU =                                  Peso                              

  =P8,000

= $200; or Direct Exchange Rate P40.00

= P8,000 x $1/P40 = $200

3. 4,000 Singapore dollars x P32 = P128,000

Problem IIa. Exchange rates:

Arrival Date Departure Date

Direct Exchange Rate

1 Singapore dollar = P33.00

(P33,000 / 1,000 Singapore dollars)

1 Singapore Dollar = P32.50

(P3,250 / 100 Singapore dollars)

Indirect Exchange Rate

P1.00 = .03 Singapore dollars

(1,000 Singapore dollars / P33,000)

P1.00 = .03 Singapore dollars

(100 Singapore dollars / P3,250))

2. The direct exchange rate has decreased. This means that the peso has strengthened during Mr. Alt's visit. For example, upon arrival, Mr. Alt had to pay P33 per each dollar. Upon departure, however, each dollar is worth just P32.50. This means that the relative value of the peso has increased or, alternatively, the value of the dollar has decreased.

3. The Philippine peso equivalent values for the 100 Singapore dollars are:

Arrival date100 dollars x P33.00 = P3,30

0Departure date

100 dollars x P32.50 = 3,250

Foreign Currency Transaction Loss P

50

Mr. Alt held dollars for a time in which the dollars was weakening against the peso. Thus, Mr. Alt experienced a loss by holding the weaker currency.

Problem III1. If the direct exchange rate increases, the peso weakens relative to the foreign

currency unit. If the indirect exchange rate increases, the peso strengthens relative to the foreign currency unit.

2. Settlement Direct Exchange Rate Indirect Exchange Rate

Transaction Currency Increases Decreases Increases Decreases

Importing Peso NA NA NA NAImporting

LCU L G G L

Exporting Peso NA NA NA NAExporting LCU G L L G

Problem IV1. December 1, 20x4 (Transaction date):

Purchases…………………….. 973,200 Accounts payable ($24,000 x P40.55)………………………………

973,200

December 31, 20x4 (Balance sheet date):Foreign currency transaction loss….………………….. 6,000 Accounts payable [$24,000 x (P40.80 – P40.55)]……… 6,000

Accounts payable valued at 12/31 Balance Sheet ($24,000 x P40.80)……… P979,200Accounts payable valued at 12/1 Date of Transaction ($24,000 x P40.55)……… 973,200Adjustment to accounts payable needed……….. P 6,000

March 1, 20x5 (Settlement date):Accounts payable………………… 979,200 Foreign currency transaction gain [$24,000 x (P40.80 – P40.65)]

3,600

Cash ($24,000 x P40.65)……………. 975,600

2. a. a.1. None – transaction date (December 1, 20x4) a.2. P6,000 loss a.3. P3,600 gain (March 1, 20x5)

b. b.1. P979,200 – spot rate on the balance sheet date or current rate on the balance sheet b.2. P973,200 – spot rate on the transaction date or historical rate on the balance sheet

date.

Problem V1. December 1, 20x4 (Transaction date):

Accounts receivable ($60,000 x P40.00)……………………………… 2,400,000 Sales 2,400,000

December 31, 20x4 (Balance sheet date):Accounts receivable……….. 42,000 Foreign currency transaction gain [$60,000 x (P40.70 – P40.00)]

42,000

Accounts receivable valued at 12/31 Balance Sheet ($60,000 x P40.70)……… P2,442,000Accounts receivable valued at 12/1 Date of Transaction ($60,000 x P40.00)……… 2,400,000Adjustment to accounts receivable needed……….. P 42,000

March 1, 20x5 (Settlement date):Cash ($60,000 x P40,60)……………….. 2,436,000Foreign currency transaction loss……… 6,000 Accounts receivable ($60,000 x P40.70)………. 2,442,000

2. a. a.1. None – transaction date a.2. P42,000 gain a.3. P6,000 loss (March 1, 20x5)

b. b.1. P2,442,000 – spot rate on the balance sheet date or current rate on the balance sheet b.2. P973,200 – spot rate on the transaction date or historical rate on the balance sheet

date.

Problem VIThe entries to record these transactions and the effects of changes in exchange rates are as follows:

November 1, 20x4 (Transaction date):Equity investment (FVTPL)/Financial Asset …………… 3,840,000 Cash 3,840,000 To record the purchase of shares in Pineapple Computers at a cost of

$96,000 at the exchange rate of P40.

December 10, 20x4 (Transaction date):Equipment ………………………… 636,000 Cash 636,000 To record the purchase of equipment costing 12,000 euros at the

exchange rate of P53.

December 31, 20x4 (Balance sheet date):Equity investment (FVTPL)/Financial Asset …………… 1,020,000 Unrealized gain in fair value of equity investment (financial asset)

1,020,000

To record gain in fair value of Pineapple Computer’s share.

12/31/x4: Revalued Investment and translated at the rate on the date of revaluation (closing/current rate): (1,200 units x $100 x P40.50)……………. P4,860,0

0011/1/x4: Investment, cost (1,200 units x $80 x P40.00) 3,840,0

00

Unrealized gain on equity investment P1,020,000

Less: Foreign currency transaction gain – equity investment 11/1/20x4: Date of transaction (1,200 units x $80 x P40)..

P3,840,000

Less: 12/31/20x4: B/S Date (1,200 units x $80 x P40.50)….

3,888,000 48,000

Other unrealized gain in the fair value of equity investment...

P 972,000

Foreign currency transaction loss….………………….. 19,200 Accounts payable [$96,000 x (P53.20 – P53)]……… 19,200 To record exchange loss on accounts payable in euros.

Accounts payable valued at 12/31 Balance Sheet (1,200 x $80 x P53.20)……… 5,107,200Accounts payable valued at 12/1 Date of Transaction (1,200 x $80 x P53.00)……… 5,088,000Adjustment to accounts payable needed……….. P 19,200

February 3, 20x5 (Settlement date):Accounts payable………………… 5,107,200Foreign currency transaction loss [$96,000 x (P53.80 – P53.20)] 57,600 Cash ($96,000 x P53.80)……………. 5,164,800 To record exchange loss on accounts payable in euros and settlement of accounts payable in euros at the spot rate of P53.80.

Note the following: The investment in Pineapple Computers, Inc shares is a non-monetary item

that is carried at fair value as it is classified as equity investment through profit or loss (or a financial asset – FVTPL refer PFRS 9). The investment is revalued and translated at the rate on the date of revaluation, that is, December 31, 20x4.

The equipment is translated at the spot rate at the date of purchase and, being a non-monetary item, is carried at cost. It is not adjusted for the change in the exchange rate at balance sheet date. The accounts payable in euros is a monetary item and is remeasured using the current/closing rate at balance sheet date. The exchange loss is expensed off to the income statement

Problem VII1. May 1 Inventory (or Purchases) 8,400

Accounts Payable 8,400 Foreign purchase denominated in pesos

June 20 Accounts Payable 8,400 Cash 8,400 Settle payable.

July 1 Accounts Receivable 10,000 Sales 10,000 Foreign sale denominated in pesos

August 10 Cash 10,000 Accounts Receivable 10,000

Collect receivable.

2. May 1 Inventory (or Purchases) 8,400 Accounts Payable (FC1) 8,400 Foreign purchase denominated in yen: P8,400 / P.0070 = FC1 1,200,000

June 20 Foreign Currency Transaction Loss 600 Accounts Payable (FC1) 600 Revalue foreign currency payable to peso equivalent value: P9,000 = FC1 1,200,000 x P.0075 June 20 spot

rate - 8,400 = FC1 1,200,000 x P.0070 May 1 spot rate P   600 = FC1 1,200,000 x (P.0075 - P.0070)

Accounts Payable (FC1) 9,000 Foreign Currency Units (FC1) 9,000 Settle payable denominated in FC1.

July 1 Accounts Receivable (FC2) 10,000 Sales 10,000 Foreign sale denominated in foreign currency 2 (FC 2) FC3: P10,000 / P.20 = FC2 50,000

August 10 Accounts Receivable (FC2) 1,000 Foreign Currency Transaction Gain 1,000 Revalue foreign currency receivable to U.S. dollar equivalent value: P 11,000 = FC2 50,000 x P.22 Aug. 10 spot rate -   10,000 = FC2 50,000 x P.20 July 1 spot rate P  1,000 = FC2 50,000 x (P.22 - P.20)

Foreign Currency Units (FC2) 11,000 Accounts Receivable (FC2 11,000 Receive FC 2 in settlement of receivable

Problem VIII1. Denominated in FC

RR Imports reports in Philippine pesos:

12/1/x4 12/31/x4 1/15/x5

Transaction Date

Balance Sheet Date

Settlement Date

Direct Exchange Rate

P.70 P.66 P.68

2. December 1, 20x4 Inventory (or Purchases) 10,500 Accounts Payable (FC) 10,500 P10,500 = FC 15,000 x P.70

December 31, 20x4 Accounts Payable (FC) 600 Foreign Currency Transaction Gain 600 Revalue foreign currency payable to equivalent peso value: P 9,900 = FC 15,000 x P.66 Dec. 31 spot rate -10,500 = FC 15,000 x P.70 Dec. 1 spot rate P 600 = FC 15,000 x (P.66 - P.70)

January 15, 20x5 Foreign Currency Transaction Loss 300 Accounts Payable (FC) 300 Revalue payable to current peso equivalent P10,200 = FC 15,000 x P.68 Jan. 15, 20x5, value - 9,900 = FC 15,000 x P.66 Dec. 31, 20x4, value P 300 = FC 15,000 x (P.68 - P.66)

Accounts Payable (FC) 10,200 Foreign Currency Units (FC) 10,200 P10,200 = FC 15,000 x P.68

Accounts Payable (FC)(FC 15,000 x P.70) 12/1/x4 10,500

AJE 12/31/x4           600                     (FC 15,000 x P.66) Bal 12/31/x4 9,900

AJE 1/15/x5     300 (FC 15,000 x P.68) Bal 1/15/ x5 10,200

1/15/x5 Settlement 10,200                       Bal 1/16/x5         -0-

Problem IX1. December 31, 20x6

Accounts Receivable (FC1) 10,000 Foreign Currency Transaction Gain 10,000 Adjust receivable denominated in FC1 to current peso equivalent and recognize exchange gain: P83,600 = FC475,000 x P.176 Dec. 31 spot rate - 73,600 = Preadjusted Dec. 31, 20x6, value P10,000

Accounts Payable (FC2) 5,200 Foreign Currency Transaction Gain 5,200

Adjust payable denominated in foreign currency to current peso equivalent and recognize exchange gain: P175,300 = Preadjusted Dec. 31, 20x6, value - 170,100 = FC2 21,000,000 x P.0081, Dec. 31 spot rate P 5,200

2. Accounts Receivable (FC1) 1,900 Foreign Currency Transaction Gain 1,900 Adjust receivable denominated in FC1 to equivalent peso value on settlement date: P85,500 = FC1 475,000 x P.180 20x7 collection date value - 83,600 = FC1 475,000 x P.176 Dec. 31, 20x6, spot rate P 1,900 = FC1 475,000 x (P.180 - P.176)

Cash 164,000Foreign Currency Units (FC1) 85,500 Accounts Receivable (FC1) 85,500 Accounts Receivable (P) 164,000 Collect all accounts receivable.

3. Accounts Payable (FC2) 6,300 Foreign Currency Transaction Gain 6,300 Adjust payable to equivalent peso value on settlement date: P163,800 = FC2 21,000,000 x P.0078 20x7 payment date value - 170,100 = FC2 21,000,000 x P.0081 Dec. 31, 20x6, spot rate P 6,300 = FC2 21,000,000 x (P.0078 - P.0081)

Accounts Payable (P) 86,000Accounts Payable (FC2) 163,800 Foreign Currency Units (FC2) 163,800 Cash 86,000 Payment of all accounts payable.

4. Transaction gain on FC:December 31, 20x6 P10,000 gainDecember 31, 20x7   1,900 gain Overall P11,900 gain

5. Transaction gain on FC2:December 31, 20x6 P  5,200 gainDecember 31, 20x7   6,300 gain Overall P11,500 gain

5. Overall foreign currency transactions gain:Gain on FC1 transaction P11,900Gain on FC2 transaction   11,500

P23,400

CDL could have hedged its exposed position. The exposed positions are only those denominated in foreign currency units. The accounts receivable denominated in FC1 could be hedged by selling FC1 in the forward market,

thereby locking in the value of the FC1. The accounts payable denominated in FC2 could be hedged by buying FC2 in the forward market, thereby locking in the value of the FC2.

Problem X

Accounts Receivable

Accounts Payable      

Foreign Currency Transaction

Exchange Loss    

Foreign Currency Transaction

Exchange Gain

Case 1             NA             P16,000(a)             NA             P2,000(b)

Case 2 P38,000(c)             NA                         NA             P2,000(d)

Case 3             NA             P27,000(e)   P3,000(f)             NA          

Case 4 P6,250(g)             NA               P1,250(h)             NA          

(a) LCU 40,000 x P.40(b) LCU 40,000 x (P.40 - P.45)(c) LCU 20,000 x P1.90(d) LCU 20,000 x (P1.90 - P1.80)(e) LCU 30,000 x P.90(f) LCU 30,000 x (P.90 - P.80)(g) LCU 2,500,000 x P.0025(h) LCU 2,500,000 x (P.0025 - P.003)

Multiple Choice Problems

1.

c C$1 / P.90 (C$1.11 = P1.00)

2. d     20x4         20x5       P.4895 x FC30,000 P14,685 P.4845 x FC30,000 P14,535 P.4845 x FC30,000     14,535 P.4945 x FC30,000     14,835  

Gain P     150 Loss P     (300 )

3. b January 15Foreign Currency Units (LCU) 300,000Exchange Loss 15,000 Accounts Receivable (LCU) 315,000 Collect foreign currency receivable and recognize foreign currency transaction loss for changes in exchange rates: P300,000 = (LCU 900,000 / LCU 3) Jan. 15 value - 315,000 = Dec. 31 Peso equivalent P 15,000 Foreign currency transaction loss

4.

d P120,000  = July 1, 20x4, Peso equivalent value

P140,000  = December 31, 20x4, Peso equivalent value(LCU 840,000 / P140,000) = LCU 6 / P1

-105,000  = July 1, 20x5, Peso equivalent value                              (LCU 840,000 / 8) = P105,000P(35,000) Foreign currency transaction loss

5.

d P280,000 = July 1, 20x5, Peso equivalent value

-240,000 = December 31, 20x4, Peso equivalent valueP 40,000 Foreign currency transaction loss

6. c P4,000Accounts Payable (FCU)

(200,000 x P.4875) 12/10/x4 97,500AJE 4,000

(200,000 x P.4675) 12/31/x4 93,500

Accounts Payable (FCU) 4,000Foreign Exchange Gain 4,000

7. d P27,000 = P6,000 + P20,000 + P1,000

Accounts Payable (FCU)

1/20/x4 90,000AJE 6,0003/20/x4 96,000

Foreign Exchange Loss 6,000 Accounts Payable (FCU) 6,000

Notes Payable (FCU)7/01/x4 500,000AJE 20,000

12/31/x4 520,000Foreign Exchange Loss 20,000 Notes Payable (FCU) 20,000

Interest Payable (FCU)(FCU500,000 x .10 x 1/2

year)25,000

AJE 1,00012/3/x4 26,000

Interest expense 25,000 Interest Payable (FCU) 25,000

Foreign Exchange Loss 1,000 Interest Payable (FCU) 1,000

8. c P5,000Accounts Receivable (FCU)

10/15/x4 100,000AJE 5,000

11/16/x4 105,000 Settlement 11/16/x4 105,000

Accounts Receivable (FCU) 5,000Foreign Exchange Gain 5,000

Note: The receivable is recorded on October 15, 20x4, when the goods were shipped, not on September 1, 20x4, when the order was received.

9. b P1,000Accounts Payable (FCU)

(10,000 x P.60) 4/08/x4 6,000x4 AJE 500

(10,000 x P.55) 12/31/x4 5,500X5 AJE 1,000

(10,000 x P.45) 3/01/x5 4,500Settlement 4,500            

Bal. -0-X5 AJE Accounts Payable (FCU) 1,000

Foreign Exchange Gain 1,000

10.

b P9,000 = 300,000 FCUs x (P1.65 - P1.62). The foreign currency transaction gain is computed using spot rates on the transaction date (November 30, 20x4) and the balance sheet date (December 31, 20x4). The forward exchange rates are not used because the transaction was not hedged.

11. b Cash collected (spot rate date of settlement): 900,000 LCU x P.3333 = P300,000

12. d 20x4: (P.5395 – P.5445) loss x 70,000 FCU = P350 loss 20x5: (P.5445 - .P5495) loss x 70,000 FCU = P350 loss

13. c – Date of transaction (7/7) P 2.08Balance sheet date (8/31) 2.05Foreign exchange currency gain per FCU P .03Multiplied by: No. of FCU 350,000Foreign exchange currency gain P 10,500

14. bDate of transaction (7/3) P 1.58Balance sheet date (8/31) 1.55Foreign exchange currency gain per FCU P .03Multiplied by: No. of FCU 375,000Foreign exchange currency gain P 11,250

15. b – The value of the asset acquired should be the spot rate on the date of transaction, i.e. P-80. Therefore, the final recorded value of the electric generator should be P40,000 (P.80 x 50,000 FCs)

16. a

Date of transaction P .75Date of settlement .80Foreign exchange currency gain per FCU P .05Multiplied by: No. of FCU 200,000Foreign exchange currency gain P 10,000

17. dDate of transaction (12/15) P .60Balance sheet date (12/31) .65Foreign exchange currency gain per FCU P .05Multiplied by: No. of FCU 80,000Foreign exchange currency gain P 4,000

18. bDate of transaction (11/30) P 1 .65Balance sheet date (12/31) 1.62Foreign exchange currency gain per FCU P .03Multiplied by: No. of FCU 300,000Foreign exchange currency gain P 9,000

19. bDate of transaction (11/30) P 1.49Balance sheet date (12/31) 1.45Foreign exchange currency gain per FCU P .04Multiplied by: No. of FCU 500,000

Foreign exchange currency gain P 20,000

20. aDate of arrival (P1,000 / 480,000 FC) P .00208Date of departure (P100/50,000 FC) .0020

0Foreign exchange currency loss per FCU P .00008Multiplied by: No. of FCU 50,000Foreign exchange currency loss P 4

21. bDate of transaction (10/1) P 1.20Balance sheet date (12/31) 1.10Foreign exchange currency gain per LCU P .10Multiplied by: No. of LCU 5,000Foreign exchange currency gain P 500

22. dDate of transaction (11/2) P 1. 08Balance sheet date (12/31) 1.10Foreign exchange currency gain per LCU P .02Multiplied by: No. of LCU 23,000Foreign exchange currency gain P 460

23. aDate of transaction (9/3) : P17,000 / P.85 = 20,000 FC P . 85Date of settlement (10/10) .90Foreign exchange currency loss per FC P .05Multiplied by: No. of FC 20,000Foreign exchange currency loss P 1,000

24. bDate of transaction (3/1) : P31,000 / P.31 = 100,000 FC P . 31Date of settlement (5/10) .34Foreign exchange currency gain per FC P .03Multiplied by: No. of FC 100,000Foreign exchange currency gain P 3,000

25. aDate of transaction (12/5) P .265Balance sheet date (12/31) .262Foreign exchange currency gain per FC P .003Multiplied by: No. of FC 100,000Foreign exchange currency gain P 300

26. dBalance sheet date (12/31) P .262Date of settlement (1/10) .264Foreign exchange currency loss per FC P .002Multiplied by: No. of FC 100,000Foreign exchange currency loss P 200

27. cForeign exchange currency gain (No. 25) P 300Foreign exchange currency loss (No. 26) _ 200Overall gain , net P 100

or,Date of transaction (12/5) P .265Date of settlement (1/10) .264Foreign exchange currency gain per FC P .001Multiplied by: No. of FC 100,000Foreign exchange currency gain P 100

28. c 9/5: Original forward rate or 90-day forward rate P .185012/2: Date of expiration of the contract (assumed) since the term “spot rate” was used

.1865

Foreign exchange currency gain per FC P .0015Multiplied by: No. of FC 100,000Foreign exchange currency gain P 150

It should be noted that since, the forward contract was not designated as a hedge, offsetting of gain or loss on the hedged item and hedging instrument is not allowed. Therefore, the foreign exchange gain due to revaluation of receivable from foreign currency receivable arising from forward contract will be reported separately, instead of being netted against the exchanges loss of P300 [(P.1865 – P.1835) x 100,000 FCs.]

29. c – the question is related to purchase transaction or exposed liability, therefore the

payment of the liability is equivalent to the spot rate on the date of settlement.

30. b 20x4

Date of transaction (12/1/20x4) P .0095Balance sheet date (12/31/20x4) .009

6Foreign exchange currency loss per FC P .000

1Multiplied by: No. of FC 1,000,000Foreign exchange currency loss P 100

20x5

Balance sheet date (12/31/20x4) P .0096Date of settlement (1/10/20x5) .0094Foreign exchange currency gain per FC P .0002Multiplied by: No. of FC 1,000,000Foreign exchange currency gain P 200

31. cBalance sheet date (12/31/20x4) P125,000Date of settlement (7/1/20x5) 140,000Foreign exchange currency loss P 15,000

32. b – any gain or loss on foreign currency should be considered ordinary.

33. d 1/1: Original forward rate or 60-day forward rate P .940 3/1: Date of expiration of the contract .930Foreign exchange currency gain per FC P .010Multiplied by: No. of FC 100,000

Foreign exchange currency gain P 1,000

It should be noted that since, the forward contract was not designated as a hedge, offsetting of gain or loss on the hedged item and hedging instrument is not allowed. Therefore, the foreign exchange gain due to revaluation of payable to foreign exchange dealer arising from forward contract will be reported separately, instead of being netted against the exchanges loss of P1,500 [(P.945 – P.93) x 100,000 FCs.]

34. c It was assumed that the forward contract was designated as a hedging instrument.

Hedged Item: Exposed Asset (Receivable)1/1: Date of transaction – spot rate P .94512/31: Balance sheet date .930Foreign exchange currency loss per FC P .015Multiplied by: No. of FC 100,000Foreign exchange currency loss P 1,500 P 1,500

Forward Contract/Hedging Instrument: 1/1: Original forward rate or 60-day forward rate P .940 3/1: Date of expiration of the contract .930Foreign exchange currency gain per FC P .010Multiplied by: No. of FC 100,000Foreign exchange currency gain P 1,000 1,000Net loss P 500

35. d It was stated in the requirement that the forward contract will not be used, therefore,

only the loss on hedged item will be recognized.

Hedged Item: Exposed Asset (Receivable)1/1: Date of transaction – spot rate P .94512/31: Balance sheet date .930Foreign exchange currency loss per FC P .015Multiplied by: No. of FC 100,000Foreign exchange currency loss P 1,500

36. dDate of transaction (4/8) : P1 / .65 FC (direct quote) P 1.54Date of settlement (5/8): P1/ .70 FC (direct quote) 1.43Foreign exchange currency loss per FC P .11Multiplied by: No. of FC 35,000Foreign exchange currency loss P 3,850

37. d – the amount of sales should be the spot rate on the date of transaction (or the balance sheet date - historical rate). I.e., P1.7241 x 10,000 FCs = P17,241.

38. e

1/1: Date of transaction – spot rate P 1.724112/31: Balance sheet date 1.818

2Foreign exchange currency gain per FC P .0941Multiplied by: No. of FC 10,000Foreign exchange currency gain P 941

39. bBalance sheet date (12/31/20x4) P 1.8182

Date of settlement (1/30/20x5) 1.6666Foreign exchange currency loss per FC P .1516Multiplied by: No. of FC 10,000Foreign exchange currency loss P 1,516

40. a – since accounts payable is an exposed account meaning their value will fluctuate based on the spot exchange rates, the value of the accounts payable should be the value on May 8, i.e., the spot rate of P1.25 (P.15 x 2,000,000 FCs = P2,500,000).

41. c 5/8: Date of transaction – spot rate P 1.255/31: Balance sheet date 1.26Foreign exchange currency loss per FC P

0.01Multiplied by: No. of FC 2,000,00

0Foreign exchange currency loss P

20,000

42. e – in a two-transaction approach, the recognition of foreign exchange gain or loss is separate from the settlement, therefore, the amount of accounts payable to be settled should be the spot rate on the settlement date, i.e., P1.20 (P1.20 x 2,000,000 FCs = P2,400,000)

43. aBalance sheet date (12/31/20x4) P8,000Date of settlement (3/2/20x5) 6,900Foreign exchange currency loss P 1,100

44. d 4/8/20x3: Date of transaction P 97,00012/31/20x3: Balance sheet date 103,000Foreign exchange currency loss P 6,000

45. dBalance sheet date (12/31/20x3) P103,000Date of settlement (4/2/20x4) 105,000Foreign exchange currency loss P 2,000

Theories 1.

False 6. True 11. True

16. d 21.

c 26. d 31.

c 36 b

2.

False 7. False 12. D 17. d 22.

b 27. b 32.

d 37. d

3.

True 8. True 13. C 18. c 23.

a 28. d 33.

d 38. c

4.

False 9. False 14. C 19. b 24.

d 29. - 34.

b 39. a

5.

True 10,

True 15. B 20. a 25.

b 30. a 35.

b