Foreign exchange rates

Mathandler1 · #1 Jul 26, 2007, 10:36 AM

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 · Jul 26, 2007, 10:58 AM

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 · May 11, 2008, 02:59 AM

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 · May 12, 2008, 12:21 AM

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 · May 12, 2008, 12:34 AM

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



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