Translate Foreign Currency Transactions Practice Test

A U.S. for-profit entity (U.S. dollar functional currency) sold goods to a customer in Switzerland on December 5, 20X4 for CHF 500,000 on account. The spot rate was $1.10/CHF on December 5 and $1.06/CHF on December 31, 20X4. Under U.S. GAAP, calculate the foreign currency gain or loss recognized in 20X4 earnings from remeasuring the franc-denominated accounts receivable at year-end.

A U.S. for-profit entity (U.S. dollar functional currency) purchased inventory from a Canadian supplier on December 1, 20X4 for C$300,000 on credit. The inventory was sold on December 20, 20X4, and the payable remained unpaid at December 31, 20X4. Spot rates were $0.74/C$ on December 1, $0.75/C$ on December 20, and $0.78/C$ on December 31. Under U.S. GAAP, what is the impact of currency remeasurement on the 20X4 income statement (excluding the inventory’s gross margin effects)?