Greco, Inc. a U.S. corporation, bought machine parts from Franco Company of Germ
ID: 2465855 • Letter: G
Question
Greco, Inc. a U.S. corporation, bought machine parts from Franco Company of Germany on March 1, 2014, for 70,000 marks, when the spot rate for marks was $0.5395. Greco's year-end was March 31, 2014, when the spot rate for marks was $0.5445. Greco bought 70,000 marks and paid the invoice on April 20, 2014, when the spot rate was $0.5495. How much should be shown in Greco's income statements as foreign exchange (transaction) gain or loss for the years ended March 31, 2014 and 2015?
A - 2014-$0; 2015-$0
B - 2014-$0; 2015-$350 loss
C - 2014-$350 loss; 2015-$0
D - 2014-$350 loss; 2015-$350 loss
Explanation / Answer
Loss on march 31 2014 = 70000 (.5395 -.5445) = - 350 loss
2015 = (.5445 - .5495 ) *70000 = - 350 loss
correct option is "D" - 2014-$350 loss; 2015-$350 loss
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