A U.S. company makes a credit purchase in Mexican pesos when the exchange rate is
$.107 and pays for the goods when the exchange rate is $.108. Which of the following statements is true?

a. A foreign-currency translation adjustment gain has occurred.
b. A foreign-currency loss has occurred.
c. A foreign-currency gain has occurred.
d. A foreign-currency translation adjustment loss has occurred


I choose (d). What does anyone think? Please answer...Thanks!

Mathandler1

I choose (d). for the answer but I do not know if it is correct or not.
Does anyone else have an idea about the answer to this question.
I thought this was a help desk forum from real experts on live answers.
I noticed that my questions for the past two days have been deleted?

Thanks!

zildjian475

what sort of transaction was it? Did the US firm sell $ (buy peso) forward or something??

If yes then different scenario...if no then the US firm is at a loss...since now it has to pay more dollars to achieve the same peso amount...

But I wonder, how can it happen? Credit sales..fine..but there should have been some contract?

morgaine300

zildjian475 -- new member mistake. Thread is close to a year old. If you're looking at the bottom of the page under similar questions, be careful as it pulls up anything similar regardless of how old it is.

zildjian475

Ohh didn't know that..thank you very much...appreciate it..