Enron Corporation Case

Page 1 of 18

Enron Corporation Case

By | December 2012
Page 1 of 18
CHAPTER 19

Multiple Choice

19-1:d.

Direct exchange rate:
December 11 ÷ 2.22 yen =P0.45
December 311 ÷ 2.70 yen = 0.37
Decrease in forex rateP0.08

Forex gain (200,000 yen x P0.08)P 16,000

19-2:c.

Forex rate, December 1P0.45
Forex rate, December 310.47
Increase in forex rateP0.02

Forex gain (1,500,000 yen x P0.02)P 30,000

19-3:d.

September 30:
Forex rate, September 1P5.61
Forex rate, September 305.59
Decrease in forex rateP0.02

Forex gain (200,000 hkg.$ x P0.02)P 4,000

December 31:
Forex rate, October 1 P5.59
Forex rate, December 305.62
Increase in forex rateP0.03

Forex loss (200,000 hkg.$ x P0.03) P (6,000)

19-4:c.

Forex loss on importation of merchandise:
Peso equivalent, January 10, 2004P 600,000
Peso equivalent, April 20, 2004 608,000
Forex loss (increase)P (8,000)

Forex loss on notes payable:
Peso equivalent, September 1, 2004P 3,000,000
Peso equivalent, December 31, 2004 3,200,000
Forex loss on principalP (200,000)
Add: Forex loss on interest
Based on P 3,2000,000P 120,000
Based on P 300,000,000 (P3,000,000x10%x4/12) 100,000 20,000
Forex loss P (220,000)
Total forex loss (P 8,000 + P220,000) P (228,000)

19-5:a.

Direct forex rate – Transaction date (P 1 ÷ $0.018)P 55.5555
Direct forex rate – Balance sheet date (P 1 ÷ $0.017) 58.8235
Direct forex rate – Settlement date (P 1 ÷ $0.020) 50.0000
Forex gain (loss), 2004
Transaction date ($10,000 x P55.5555)P 555,555
Balance sheet ($10,000 x P 58.8235) 588,235
Forex loss (increase)P ( 32,680)

Forex gain (loss), 2005
Balance sheet date ($10,000 x P58.8235)P...