Enron Corporation Case

CHAPTER 19

Multiple Choice

19-1: d.

Direct exchange rate:
December 1 1 ÷ 2.22 yen = P 0.45
December 31 1 ÷ 2.70 yen = 0.37
Decrease in forex rate P 0.08

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

19-2: c.

Forex rate, December 1 P 0.45
Forex rate, December 31 0.47
Increase in forex rate P 0.02

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

19-3: d.

September 30:
Forex rate, September 1 P 5.61
Forex rate, September 30 5.59
Decrease in forex rate P 0.02

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

December 31:
Forex rate, October 1 P 5.59
Forex rate, December 30 5.62
Increase in forex rate P 0.03

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

19-4: c.

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

Forex loss on notes payable:
Peso equivalent, September 1, 2004 P   3,000,000
Peso equivalent, December 31, 2004     3,200,000
Forex loss on principal P   (200,000)
Add: Forex loss on interest
        Based on P 3,2000,000 P 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... [continues]

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