chapter 09 solutions

8/10/2019 Chapter 09 Solutions

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> D !C'l%*l'te )ore"#n e$%&'n#e #'"n(loss,

T&e mer%&'n."se -*r%&'se res*lts "n ' )ore"#n e$%&'n#e loss o) ;?08880t&e ."))eren%e between t&e U S .oll'r e4*" 'lent 't t&e .'te o) -*r%&'se'n. 't t&e .'te o) settlement

T&e "n%re'se "n t&e .oll'r e4*" 'lent o) t&e note@s -r"n%"-'l res*lts "n ')ore"#n e$%&'n#e loss o) ;280888T&e tot'l )ore"#n e$%&'n#e loss "s ;2?0888 !;?0888 ;280888,

? D !Forw'r. %ontr'%t %'s& )low &e.#e o) )ore"#n %*rren%+ .enom"n'te.'sset(l"'b"l"t+,

T&e T&'" b'&t "s sell"n# 't ' -rem"*m !)orw'r. r'te e$%ee.s s-ot r'te,T&e e$-orter w"ll re%e" e more .oll'rs 's ' res*lt o) sell"n# t&e b'&t)orw'r. t&'n ") t&e b'&t &'. been re%e" e. 'n. %on erte. "nto .oll'rs onA-r"l 1 T&*s0 t&e -rem"*m res*lts "n '.."t"on'l re en*e )or t&e e$-orter

9 D !Forw'r. %ontr'%t )'"r 'l*e &e.#e o) )ore"#n %*rren%+ )"rm %omm"tment,

T&e -'rts "n entor+ w"ll be re%o#n"Be. 't t&e s-ot r'te 't t&e .'te o) -*r%&'se !FC1880888 $ ; 26 ;260888,

18 D !Determ"ne t&e )'"r 'l*e o) ' )orw'r. %ontr'%t,

T&e )orw'r. %ontr'%t m*st be re-orte. on t&e De%ember 610 2816 b'l'n%es&eet 's ' l"'b"l"t+ 7'rn*m &'s lo%/e.5"n to -*r%&'se r"n##"ts 't ;8 8 2-er r"n##"t b*t %o*l. &' e lo%/e.5"n to -*r%&'se r"n##"ts 't ;8 86> -er r"n##"t ") "t &'. w'"te. *nt"l De%ember 61 to enter "nto t&e )orw'r.%ontr'%t T&e )orw'r. %ontr'%t m*st be re-orte. 't "ts )'"r 'l*e."s%o*nte. )or two mont&s 't 12 !; 8 2 ; 86>, $ 108880888 ;


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;20888 ."s%o*nte. )or t&ree mont&s !;20888 $ 9>8= ;109 1 28, OnDe%ember 610 28160 3NC Cor- w"ll re%o#n"Be ' ;109 1 28 #'"n on t&e)orw'r. %ontr'%t 'n. ' )ore"#n e$%&'n#e loss o) ;20888 on t&e wonre%e" 'ble T&e net "m-'%t on 2816 "n%ome "s ;


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1 (continued)

Net impact on 2014 net income:G'"n on Fore"#n C*rren%+ O-t"on ; >88 88:oss on F"rm Comm"tment !20819 >8,S'les >>0888 88A. *stment to Net In%ome 60888 88

;>?0=?8 68

1> 7 Net %'s& "n)low w"t& o-t"on !;?80888 ;20888, ;>?0888C's& "n)low w"t&o*t o-t"on !'t s-ot r'te o) ; >>, >>0888Net "n%re'se "n %'s& "n)low ; 10888

1?528 !Forw'r. %ontr'%t )'"r 'l*e &e.#e o) ' )ore"#n %*rren%+ )"rm %omm"tment,

T&e e's"est w'+ to sol e -roblems 1? 'n. 19 "s to -re-'re o*rn'l entr"es)or t&e )orw'r. %ontr'%t )'"r 'l*e &e.#e o) ' )"rm %omm"tment T&e o*rn'lentr"es 're 's )ollows

6(1 no o*rn'l entr"es

6(61 Forw'r. Contr'%t ;102


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1?528 (continued)

(68 :oss on Forw'r. Contr'%t ;2


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21522 !O-t"on %'s& )low &e.#e o) ' )ore%'ste. )ore"#n %*rren%+ tr'ns'%t"on,

T&e e's"est w'+ to sol e -roblems 21 'n. 22 "s to -re-'re o*rn'l entr"es)or t&e o-t"on %'s& )low &e.#e o) ' )ore%'ste. tr'ns'%t"on T&e o*rn'lentr"es 're 's )ollows

11(1(16Fore"#n C*rren%+ O-t"on ;10


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21522 (continued)

Net impact on 2014 net income:O-t"on E$-ense ; !10188,Cost5o)5Goo.s5Sol. !?20888,A. *stment to Net In%ome 20888De%re'se "n Net In%ome ; !?10188,

21 7

22 C

26 !18 m"n*tes, !Fore"#n %*rren%+ -'+'ble 55 "m-ort -*r%&'se,

' T&e .e%re'se "n t&e .oll'r 'l*e o) t&e :CU -'+'ble )rom No ember 1!=80888 $ 6 < ;280>88, to De%ember 61 !=80888 $ 666 ;1909?8, "sre%or.e. 's ' ;>28 )ore"#n e$%&'n#e #'"n "n 2816

b T&e "n%re'se "n t&e .oll'r 'l*e o) t&e :CU -'+'ble )rom De%ember 61!;1909?8, to 'n*'r+ 1< !=80888 $ 6


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12(1(16 In entor+ ;0=88A%%o*nts P'+'ble !:, 80888 $ ; ;1>0=88

(1(16 A%%o*nts P'+'ble !:, ;1>0=88Fore"#n E$%&'n#e :oss 88

C's& 80888 $ ; < ;1?0888

=(1(16 In entor+ ;1 0188

A%%o*nts P'+'ble !:, 680888 $ ; > ;1 0188?(1(16 A%%o*nts Re%e" 'ble !:, 80888 $ ; ? ;190288

S'les ;190288

Cost5o)5Goo.s Sol. ;90?>8In entor+ ;1 0188 $ >8 ;90?>8

18(1(16 C's& 680888 $ ; 9 ;1 0>88A%%o*nts Re%e" 'ble !:, ;190288 $ 6( ;1 0 88

Fore"#n E$%&'n#e G'"n 688

11(1(16 A%%o*nts P'+'ble !:, ;1 0188 $ 2(6 ;90 88Fore"#n E$%&'n#e :oss 280888 $ !; , =88

C's& 280888 $ ;


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A%%o*nts Re%e" 'ble !:, 180888 $ !;


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29 !28 m"n*tes, !Determ"ne "n%ome e))e%t o) )ore"#n %*rren%+ -'+'ble "m-ort-*r%&'se,

' 7en 'm"n0 In% &'s ' l"'b"l"t+ o) A: 1=80888 On t&e .'te t&'t t&"s l"'b"l"t+w's %re'te. !De%ember 10 2816,0 t&e l"'b"l"t+ &'. ' .oll'r 'l*e o) ;>80 88 !A: 1=80888 $ ; , On De%ember 610 28160 t&e .oll'r 'l*e &'sr"sen to ;>=0?88 !A: 1=80888 $ ; ?, T&e "n%re'se "n t&e .oll'r 'l*e o) t&e l"'b"l"t+ %re'tes ' )ore"#n e$%&'n#e loss o) ;=0 88 !;>=0?88 ;>80 88,"n 2816

7+ 3'r%& 10 281 0 w&en t&e l"'b"l"t+ "s -'".0 t&e .oll'r 'l*e &'s .ro--e.to ;>20888 !A: 1=80888 $ ; 20888 ;>=0?88, to be re-orte. "n 281

b 7en 'm"n0 In% &'s ' l"'b"l"t+ o) A: 1=80888 On t&e .'te t&'t t&"s l"'b"l"t+w's %re'te. !Se-tember 10 2816,0 t&e l"'b"l"t+ &'. ' .oll'r 'l*e o) ;>60=88 !A: 1=80888 $ ; =, On De%ember 10 28160 w&en t&e l"'b"l"t+ "s-'".0 t&e .oll'r 'l*e &'s .e%re'se. to ;>80 88 !A: 1=80888 $ ; , T&e.ro- "n t&e .oll'r 'l*e o) t&e l"'b"l"t+ %re'tes ' )ore"#n e$%&'n#e #'"n o) ;60288 !;>80 88 ;>60=88, "n 2816

% 7en 'm"n0 In% &'s ' l"'b"l"t+ o) A: 1=80888 On t&e .'te t&'t t&"s l"'b"l"t+w's %re'te. !Se-tember 10 2816,0 t&e l"'b"l"t+ &'. ' .oll'r 'l*e o) ;>60=88 !A: 1=80888 $ ; =, On De%ember 610 28160 t&e .oll'r 'l*e &'sr"sen to ;>=0?88 !A: 1=80888 $ ; ?, T&e "n%re'se "n t&e .oll'r 'l*e o) t&e l"'b"l"t+ %re'tes ' )ore"#n e$%&'n#e loss o) ;60288 !;>=0?88 ;>60=88,"n 28167+ 3'r%& 10 281 0 w&en t&e l"'b"l"t+ "s -'".0 t&e .oll'r 'l*e &'s .ro--e.

to ;>20888 !A: 1=80888 $ ; 20888 ;>=0?88, to be re-orte. "n 281

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc., 2013Hoyle, Schaefer, o!pni", Advanced Accounting, 11#e $-11


12/43

68 !68 m"n*tes, !Fore"#n %*rren%+ borrow"n#,

' 9(68(16 C's& ;1880888Note -'+'ble !.*.e/, 108880888 $ ; 18 ;1880888

!To re%or. t&e note 'n. %on ers"on o) 1 m"ll"on.*.e/s "nto ; 't t&e s-ot r'te ,

12(61(16 Interest E$-ense ;


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68 (continued)

9(68(1< Interest E$-ense 106>< ( ;1880888 2> 6? )or 9 mont&s

6= < )or 12 mont&s

6= < )or 12 mont&s7e%'*se o) '--re%"'t"on "n t&e 'l*e o) t&e .*.e/0 t&e e))e%t" e 'nn*'lborrow"n# %osts r'n#e )rom 22 1 6= AOCI ;=== =>

Fore"#n C*rren%+ !FCU, ; 90888A%%o*nts Re%e" 'ble !FCU, ; 90888

C's& ;


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6= (continued)

281 o*rn'l Entr"es

1(61 Fore"#n E$%&'n#e :oss ;0888

C's& ;18 0888Fore"#n C*rren%+ !mon#s, ;9?0888Forw'r. Contr'%t ;=0888

The impact on net income !or the "ear 2014 is:

Net Fore"#n E$%&'n#e :oss ;!20888,:oss on Forw'r. Contr'%t !10921,Im-'%t on net "n%ome ;!60921,

T&e net e))e%t on t&e b'l'n%e s&eet "s 'n "n%re'se "n %'s& o) ;18 0888 'n. 'n"n%re'se "n "n entor+ o) ;1


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6> ! 8 m"n*tes, !Forw'r. %ontr'%t )'"r 'l*e &e.#e )ore"#n %*rren%+ re%e" 'ble'n. )"rm %omm"tment !s'le,,

' Fore"#n C*rren%+ Re%e" 'ble

18(81 A%%o*nts Re%e" 'ble !:CU, ;=90888S'les !1880888 :CUs $ ; =9, ;=90888

T&ere "s no )orm'l entr+ )or t&e )orw'r. %ontr'%t

12(61 A%%o*nts Re%e" 'ble !:CU, ;20888Fore"#n E$%&'n#e G'"n ;20888

!; >1 ; =9, $ 1880888

:oss on Forw'r. Contr'%t ;?0918 98Forw'r. Contr'%t ;?0918 98

!; > ; =2 ; =0888 loss ?0918 98 ; 10918 98 #'"n

Fore"#n C*rren%+ !:CU, ;>20888A%%o*nts Re%e" 'ble !:CU, ;>20888

C's& ;=0888

Fore"#n C*rren%+ !:CU, ;>20888

The impact on net income:

S'le ;=90888 88Fore"#n E$%&'n#e G'"n 60888 88:oss on Forw'r. Contr'%t !?0918 98,G'"n on Forw'r. Contr'%t 10918 98Im-'%t on net "n%ome ;=


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6> (continued)

b Fore"#n C*rren%+ F"rm Comm"tment !S'le,

18(81 T&ere "s no entr+ to re%or. e"t&er t&e s'les '#reement or t&e)orw'r. %ontr'%t 's bot& 're e$e%*tor+ %ontr'%ts

12(61 :oss on Forw'r. Contr'%t ;?0918 98Forw'r. Contr'%t ;?0918 98

F"rm Comm"tment ;?0918 98G'"n on F"rm Comm"tment ;?0918 98

1(61 Forw'r. Contr'%t ;10918 98G'"n on Forw'r. Contr'%t ;10918 98

:oss on F"rm Comm"tment ;10918 98F"rm Comm"tment ;10918 98

Fore"#n C*rren%+ !:CU, ;>20888S'les ;>20888

C's& ;=0888

Fore"#n C*rren%+ !:CU, ;>20888

A. *stment to Net In%ome ;>0888F"rm Comm"tment ;>0888

Impact on Net Income:

S'les ;>20888Net :oss on Forw'r. Contr'%t !>0888,Net G'"n on F"rm Comm"tment >0888A. *stment to Net In%ome !>0888,

;=


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6? !68 m"n*tes, !Forw'r. %ontr'%t )'"r 'l*e &e.#e o) ' )ore"#n %*rren%+ )"rm%omm"tment !-*r%&'se,,

Forw'r. Forw'r. Contr'%t F"rm Comm"tment

R'te to C&'n#e "n C&'n#e "nD'te 18(61 F'"r L'l*e F'"r L'l*e F'"r L'l*e F'"r L'l*e?(1 ; 68 ;8 5 ;8 ;8 59(68 ; 62< ; 09


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69 !68 m"n*tes, !O-t"on )'"r 'l*e &e.#e o) ' )ore"#n %*rren%+ )"rm %omm"tment!s'le,,

F"rm Comm"tment O-t"on O-t"on

S-ot C&'n#e "n Prem"*m C&'n#e "nD'te R'te F'"r L'l*e F'"r L'l*e )or 9(1 F'"r L'l*e F'"r L'l*e=(1 ;1 88 5 5 ;8 818 ;0888

Fore"#n C*rren%+ !le/, ; ?


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69 (continued)

b Im-'%t on Net In%ome

The impact on net income !or the second #uarter is:

:oss on F"rm Comm"tment ;! 0981 0888 88A. *stment to Net In%ome 1


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8 !28 m"n*tes, !O-t"on )'"r 'l*e &e.#e o) ' )ore"#n %*rren%+ )"rm %omm"tment!-*r%&'se,,

F"rm Comm"tment O-t"on O-t"on

S-ot C&'n#e "n Prem"*m C&'n#e "nD'te R'te F'"r L'l*e F'"r L'l*e )or 12(28 F'"r L'l*e F'"r L'l*e11(28 ; 28 5 5 ; 88? ; 88 5', 12(28 ; 21 ;!


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b T&e o-t"on str"/e -r"%e !; 28, "s #re'ter t&'n t&e s-ot r'te !; 1?, on De%ember 280 t&e .'te t&e -'rts 're to be -'". )or T&ere)ore0 7"# Arber w"ll 'llow t&eo-t"on to e$-"re *ne$er%"se. Fore"#n %*rren%+ w"ll be '%4*"re. 't t&e s-otr'te on De%ember 28 T&e o*rn'l entr"es 're 's )ollows

11(28 Fore"#n C*rren%+ O-t"on ; 88C's& ; 88

T&ere "s no entr+ to re%or. t&e -*r%&'se '#reementbe%'*se "t "s 'n e$e%*tor+ %ontr'%t

12(28 F"rm Comm"tment ;10888G'"n on F"rm Comm"tment ;10888

:oss on Fore"#n C*rren%+ O-t"on ; 88Fore"#n C*rren%+ O-t"on ; 88

Fore"#n C*rren%+ !-" "o, ;90888C's& ;90888

P'rts In entor+ ;90888Fore"#n C*rren%+ !-" "o, ;90888

T&e )ollow"n# entr+ "s m'.e "n t&e -er"o. w&en t&e "n entor+ '))e%ts net"n%ome t&ro*#& %ost5o)5#oo.s5sol.

A. *stment to Net In%ome ;10888F"rm Comm"tment ;10888

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc., 2013$-3( Sol!%ions Man!al


37/43

1 !28 m"n*tes, !O-t"on %'s& )low &e.#e o) ' )ore%'ste. tr'ns'%t"on,

'

12(1


38/43

1 (continued)

AOCI ;180888A. *stment to Net In%ome ;180888

To tr'ns)er t&e 'mo*nt '%%*m*l'te. "n AOCI's 'n '. *stment to net "n%ome "n t&e -er"o."n w&"%& t&e )ore%'ste. tr'ns'%t"on o%%*rs

b Im-'%t on net "n%ome 2816 O-t"on E$-ense ;!10888,

281 Cost5o)5#oo.s5sol. ;!


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2 (continued)

P'rt b Forw'r. Contr'%t F'"r L'l*e He.#e o) ' Fore"#n C*rren%+ :"'b"l"t+

A%%o*nts P'+'ble !C, Forw'r. Forw'r. Contr'%tS-ot U S Doll'r C&'n#e "n U S R'te to C&'n#e "n

D'te R'te L'l*e Doll'r L'l*e 18(61 F'"r L'l*e F'"r L'l*e9(1< ;1 88 ;2880888 5 ;1 8= ;8 59(68 ;1 8< ;2180888 ;180888 ;1 89 ;


40/43

2 (continued)

P'rt % Forw'r. Contr'%t F'"r L'l*e He.#e o) ' Fore"#n C*rren%+ F"rmComm"tment !P*r%&'se,

9(1< T&ere "s no )orm'l entr+ )or t&e )orw'r. %ontr'%t or t&e -*r%&'se or.er

9(68 Forw'r. Contr'%t ;


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2 (continued)

P'rt . O-t"on C's& Flow He.#e o) ' Fore"#n C*rren%+ :"'b"l"t+

T&e )ollow"n# s%&e.*le s*mm'r"Bes t&e %&'n#es "n t&e %om-onents o) t&e )'"r'l*e o) t&e e*ro %'ll o-t"on w"t& ' str"/e -r"%e o) ;1 88 )or O%tober 61

C&'n#e C&'n#eS-ot O-t"on F'"r "n F'"r Intr"ns"% T"me "n T"me

D'te R'te Prem"*m L'l*e L'l*e L'l*e L'l*e L'l*e89(1< ;1 88 ; 86< ;>0888 5 ;8 ;>0888 1 589(68 ;1 8< ; 8>8 ;1 0888 ;>0888 ;180888 2 ; 0888 2 5 ;6088818(61 ;1 18 ; 188 ;280888 ;=0888 ;280888 ;8 6 5 ; 0888

1 7e%'*se t&e str"/e -r"%e 'n. s-ot r'te 're t&e s'me0 t&e o-t"on &'s no "ntr"ns"%'l*e F'"r 'l*e "s 'ttr"b*t'ble solel+ to t&e t"me 'l*e o) t&e o-t"on

2 "t& ' s-ot r'te o) ;1 8< 'n. ' str"/e -r"%e o) ;1 880 t&e o-t"on &'s 'n "ntr"ns"%'l*e o) ;180888 T&e rem'"n"n# ; 0888 o) )'"r 'l*e "s 'ttr"b*t'ble to t"me 'l*e

6 T&e t"me 'l*e o) t&e o-t"on 't m't*r"t+ "s Bero

9(1< In entor+ ;2880888A%%o*nts P'+'ble !e*ro, ;2880888

Fore"#n C*rren%+ O-t"on ;>0888C's& ;>0888

9(68 Fore"#n E$%&'n#e :oss ;180888A%%o*nts P'+'ble !e*ro, ;180888

Fore"#n C*rren%+ O-t"on ;>0888AOCI ;>0888

AOCI ;180888G'"n on Fore"#n C*rren%+ O-t"on ;180888

O-t"on E$-ense ;60888AOCI ;60888

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc., 2013Hoyle, Schaefer, o!pni", Advanced Accounting, 11#e $-&1


42/43

2 (continued)

18(61 Fore"#n E$%&'n#e :oss ;180888A%%o*nts P'+'ble !e*ro, ;180888

Fore"#n C*rren%+ O-t"on ;=0888AOCI ;=0888

AOCI ;180888G'"n on Fore"#n C*rren%+ O-t"on ;180888

O-t"on E$-ense ; 0888AOCI ; 0888

Fore"#n C*rren%+ !e*ro, ;2280888C's& ;2880888Fore"#n C*rren%+ O-t"on ;280888

A%%o*nts P'+'ble !e*ro, ;2280888Fore"#n C*rren%+ !e*ro, ;2280888

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc., 2013$-&2 Sol!%ions Man!al


43/43

2 (continued)

P'rt e O-t"on F'"r L'l*e He.#e o) ' Fore"#n C*rren%+ F"rm Comm"tment!P*r%&'se,

F"rm Comm"tment O-t"on Fore"#n C*rren%+ O-t"on

S-ot C&'n#e "n Prem"*m C&'n#e "nD'te R'te F'"r L'l*e F'"r L'l*e )or 18(61 F'"r L'l*e F'"r L'l*e9(1< ;1 88 ;8 5 ; 86< ; >0888 59(68 ;1 8< ; !90981, ; 90981 1 ; 8>8 ;1 0888 ;>088818(61 ;1 18 ;!280888, ;180899 ; 188 ;280888 ;=0888

1 ;2180888 ;2880888 ;!180888, $ 9981 ;!90981,0 w&ere 9981 "s t&e -resent 'l*e)'%tor )or one mont& 't 'n 'nn*'l "nterest r'te o) 12 !1 -er mont&, %'l%*l'te. 's1(1 81

9(1< Fore"#n C*rren%+ O-t"on ;>0888C's& ;>0888

9(68 Fore"#n C*rren%+ O-t"on ;>0888G'"n on Fore"#n C*rren%+ O-t"on ;>0888

:oss on F"rm Comm"tment ;90981F"rm Comm"tment ;90981

18(61 Fore"#n C*rren%+ O-t"on ;=0888G'"n on Fore"#n C*rren%+ O-t"on ;=0888

:oss on F"rm Comm"tment ;180899F"rm Comm"tment ;180899

Fore"#n C*rren%+ !e*ro, ;2280888C's& ;2880888Fore"#n C*rren%+ O-t"on 280888

In entor+ ;2280888Fore"#n C*rren%+ !e*ro, ;2280888

T&e )ollow"n# entr+ "s m'.e "n t&e -er"o. w&en t&e "n entor+ '))e%ts net "n%ome

t&ro*#& %ost5o)5#oo.s5sol.F"rm Comm"tment ;280888

A. *stment to Net In%ome ;280888

chapter 09 solutions

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