Foreign Currency

1. On September 1, 2014, Bain Corp.
received an order for equipment from a

foreign customer for 300,000 local currency units (LCU) when the peso
equivalent was 96,000. Bain shipped the equipment on October 15, 2014, and
billed the customer for 300,000 LCU when the peso equivalent was P100, 000.
Bain received the customer’s remittance in full on November 16, 2014, and sold
the 300,000 LCU for 105,000. In its income statement for the year ended
December 31, 2014, Bain should report a foreign exchange transaction gain of
a. 0
b. 4,000
c. 5,000
d. 9,000
2. On September 9, 2016, Selma Inc. accepted a non-cancellable merchandise

sales order from a Japanese firm. The contract price as 100 000 yens. The
merchandise was delivered on December 14, 2015. The invoice was dated
December 11, 2015, the shipping date (FOB Shipping Point). Full payment was
received on January 22, 2016. The spot direct exchange rates for the Japanese
yens on the respective date were as follows:
September 9, 2015 – P0.75 December 31, 2015 – P.73

December 11, 2015 – P.78 January 22, 2016 – P.725
December 14, 2015 – P.77
What is the reportable sales amount in the 2015 income statement?
a. P73,000 c. P77,000
b. P75,000 d. P78,000
3. Using the information in No. 1, what is the reportable foreign exchange gain or
loss amount in 2015 income statement?
a. P2000 gain c. P5000 loss
b. P4000 loss d. P5000 gain
4. Using the same information in No.1, what is the reported value of the receivable
from the customer at December 31, 2015?
a. P73,000 c. P77,000
b. P75,000 d. P78,000
5. On April 1, 2015, Argo Company imported 10,000,000 barrels of oil from an

Indonesian Company at a price of P3,185 per barrel payable in Indonesian
rupiah. The invoice was paid 30 days later. Indirect exchange rates for the
Indonesian rupiah were:
April 1, 2008: P1 = 132 rupiah
April 30, 2008: P1 = 130 rupiah
What is the cost of the oil?
a. P132 million rupiah c. P31.85 billion
b. P130 million rupiah d. P1.32 billion
6. Domestic Company has an accounts payable in the amount of 10,000 Bahrain

Dinar on its books on October 1, 2015. This account was unpaid at the end of the
fiscal year, October 31, 2015. The spot rate for the dinar was:
October 1, 2015: 1 Dinar = P131

October 31, 2015 : 1 Dinar = P133
On October 31, 2015, Domestic Company should report:
a. An accounts payable of P1,310,000
b. An accounts payable of P1,330,000
c. An accounts payable of 10,000 Bahrain Dinar
d. An exchange gain of P20,000
7. Juan, a Philippine Corporation, bought inventory items from a supplier in

Germany on November 5, 2015 for 100,000 marks, when the spot rate was P21.
At Juan’s December 31, 2015, year end, the spot rate was P20.5. On January
15, 2016, Juan bought 100,000 marks at the spot rate of P20.90 and paid the
invoice. How much should Juan report in its income statements for 2016 and
2017 as foreign exchange transaction gain or (loss)?
2016 2017 2016 2017
a. P (50 000) P40 000 c. P 0 P10,000
b. 50 000 (40 000) d. 10 000 0
8. On September 1, 2016, Pedro & Co., a Philippine corporation, sold merchandise

to a foreign firm for P250, 000 francs. Terms of the sale require payment in
francs on February 1, 2017. On September 1, 2016, the spot exchange rate was
P6.27 per franc. At December 31, 2011 Pedro’s year end, the spot rate was
P6.00 but the rate increased to P6.30 by February 1, 2017. When payment was
received, how much should Pedro report as foreign exchange transaction gain or
(loss) in its income statement?
2016 2017 2016 2017

a. P67,500 P(75,000) c. P 0 P7,500
b. (67,500) 75,000 d. 7,500 0
9. On July 1, 2016, Asser Company borrowed 1,680,00 local currency units (LCU)
from a foreign lender, evidenced by an interest bearing note due on July 1, 2017,
which is denominated in the currency of the lender. The Philippine peso
equivalent of the note principal was as follows:
DATE AMOUNT
7/1/2016 (date borrowed) P210, 000
12/31/2016 (Asser’s year-end) P240, 000
7/1/2017 (date repaid) P280, 000
In its income statement, what amount should Asser include as a foreign

exchange gain or (loss)?
2016 2017 2016 2017
a. P30, 000 P40,000 c. P 0 P(70,000)
b. (30,500) (40,000) d. (30,000) 0
10. On July 21, 2016, Bato Company lent P120, 000 to a foreign supplier, evidenced
by an interest bearing note due on July 1, 2017. The note is denominated in the
currency of the borrower and was equivalent to P840, 000 local currency units
(LCU) in the loan date. The note principal was appropriately included at P140,
000 in the receivables section of Bato’s December 31, 2016 balance sheet. The
note principal was repaid to Bato on July 1, 2017 due date when the exchange 8
LCU in P1. In its income statement for the year ended December 31, 2017, what
amount should Bato include as a foreign exchange rate transaction gain or loss?
a. P 0 c. P15,000 gain
b. P15,000 loss d. P35,000 loss
11. On September 1, 2016, Rosan Corp. received an order for equipment from a
foreign customer for P300,000 local currency units (LCU) when the Philippine
peso equivalent was P96,000. Rosan shipped the equipment on October 15,
2016, and billed the customer for 300,000 LCU when he Philippine peso
equivalent was P100,000. Rosan received the customer’s remittance in full on
November 16, 2016, and sold the 300,000 LCU for 105,000. In its income
statement for the year ended Decmber 31, 2016, Rosan should report a foreign
transaction gain of:
a. P 0 c. P5,000
b. 4,000 d. 9,000
12. Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on
May 8. Patment of 2,000,000 foreign currency units (FC) is due in 30 days. May
31 is Brisco’s fiscal year end. The pertinent exchange rates were as follows:
May 8 Spot Rate: P1.25

May 31 Spot Rate: P1.26
June 7 Spot Rate: P1.20
For what amount should Brisco’s Accounts Payable be credited on May 8?

a. P2,500,000 c. P1,600,000
b. P2,440,000 d. P1,639,344
13. Using the same information in No. 11, how much foreign currency will it cost
Brisco to finally pay the payable on June 7?
a. P1,666,667 c. P2,520,000
P2,440,000 d. P2,400,000

Foreign Currency

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1. On September 1, 2014, Bain Corp.

received an order for equipment from a

2. On September 9, 2016, Selma Inc. accepted a non-cancellable merchandise

September 9, 2015 – P0.75 December 31, 2015 – P.73

5. On April 1, 2015, Argo Company imported 10,000,000 barrels of oil from an

6. Domestic Company has an accounts payable in the amount of 10,000 Bahrain

October 1, 2015: 1 Dinar = P131

7. Juan, a Philippine Corporation, bought inventory items from a supplier in

8. On September 1, 2016, Pedro & Co., a Philippine corporation, sold merchandise

2016 2017 2016 2017

In its income statement, what amount should Asser include as a foreign

May 8 Spot Rate: P1.25

For what amount should Brisco’s Accounts Payable be credited on May 8?

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