Enron Corporation Case

Only available on StudyMode
  • Download(s): 33
  • Published: December 14, 2012
Read full document
Text Preview
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 588,235
Settlement data ($10,000 x P 50.00) 500,000
Forex gain (decrease)P 88,235

19-6:b.

Adjusted value of accounts receivable, 6/30P 315,000
Peso equivalent, 7/27 300,000
Forex loss P (15,000)

19-7:a.

2004
Forex rate, 11/5/04P 0.4295
Forex rate, 12/31/04 0.4245
Decrease in forex rateP 0.0050
Payable in foreign currency 50,000
Forex gainP 250

2005
Forex rate, 12/31/04P 0.4245
Forex rate, 1/15/05 0.4345
Decrease in forex rateP 0.0100
Payable in foreign currency 50,000
Forex lossP (500)

19-8:a. (1000,000 FC x P 0.85)

19-9:c. (50,000 FC x P 0.6498)

19-10:b

Forward rate, 3/31/04P 0.25
Selling spot rate, 4/30/04 0.22 DecreaseP 0.03
Forward contract receivable 100,000 FC
Forex lossP 3,000

19-11:d. forex gain (loss) on purchase commitments is based on the changes in the forward rates.

Forward rates – December 31, 2004P .0055
90-day forward rate .0055

On December 31, 2004, no changes in forward rates occurred, so no forex gains (losses) are to be recognized on December 31, 2004 under both transactions.

19-12:b.

Forward contract receivable (P100,000 Baht x P1.650)P 165,000
Spot rate (100,000 Baht x P1.600) 160,000
Forex lossP (5,000)

19-13:d.

Import transaction – Based on spot rates:
12/31/04: Forex loss [1,000,000 Francs x (P6.01 – P6.16)]P (150,000)
Forward Contract – Based on forward rates:
12/31/04: Forex gain [1,000,000 Francs x (P6.06 – P6.07)]P 10,000

Net forex lossP (140,000)
19-14:b.

12/31/04: Forex gain [$5,000 x (P56.50...
tracking img