RiceWhol esal
ingCorp.accountsfori
nventor
yonaFI FObasis.Therewere8,
000uni t
sin
i
nv entor
yonJanuar y1,20x3.Costswereincurr
edandgoodspur chasedasfoll
owsdur i
ng
20x3: Ri
ceestimatesthatthecurr
entcostperunitofi
nventor
ywas₱57atJanuar y1,20x3,
and₱71atDecember31, 20x3.2.Howmuchi st he20x3costofgoodssoldrestat
edto
currentcost?
1,
920,
000
Enti
tyAhasj uststart
editsoperat
ionsonJanuary1, 20x1.Onthi
sdat e,
Ent i
tyA’sequity
consist
edof₱2M shar ecapital
,whichwereissuedalsoont hi
sdate.Entit
yA’ sfunct
ional
curr
encyisthePhilippi
nepeso( ₱).However
,itwishestopresentit
s20x1f inancial
stat
ement si
ntoJapanesey en(¥).Thefol
l
owi nginformati
onwasgat heredonDecember31,
20x1,aft
eray earofoperati
ons.4.Howmuchi sthetransl
atedprof
itorloss?
C.Y9M
Accordi
ngtoPFRS7, i
tist
heriskt
hatthefai
rval
ueorfut
urecashfl
owsofaf
inanci
al
i
nstrumentwi
ll
fluct
uatebecauseofchangesi
nforei
gnexchanger
ates.
Cur
rencyr
isk
OnDecember15, 20x1,ABCCo.pur chasedgoodsf r
om aKoreanfi
rmf or40,000wons.ABC
Co.wasconcernedaboutt hef
luctuati
oni nt
heKor eanwon,soont hi
sdat e,
ABCCo.
ent
eredi
ntoa30- dayforwardcontracttobuy40,000wonsf or₱49,600from abankatthe
for
wardr
ateof₱1. 24.Assumingt heforwardcontracti
ssettl
edonanetcashbasi s,how
muchisthenetcashset t
lementreceipt(pay
ment )onJanuary15,20x2?
2,
400
Di
scl
osur
eofi
nfor
mat
ionaboutsi
gni
fi
cantconcent
rat
ionsofcr
edi
tri
ski
srequi
redf
or:
Al
lfi
nanci
ali
nst
rument
s
Hall
,Inc.
,ent
ersi ntoacall
opti
oncontractwi t
hBennet tI
nv estmentCo.onJanuary2,2002.
Thiscontr
actgi v
esHalltheopti
ontopur chase1,000shar esofWSM st ockat$100per
share.Theoptionexpir
esonApr i
l30,2002.WSM shar esar et r
adi
ngat$100pershareon
January2,2002, atwhi
chtimeHallpays$400f ort
hecallopt i
on.Assumet hatt
hepri
ceper
shareofWSM st ockis$120onApr i
l30,2002, andthatthet imevalueoftheopti
onhasnot
changed.Inordertosettl
etheopti
oncont ract
,Hall
,Inc.,
woul dmostl i
kel
y
r
ecei
ve$20,
000f
rom Bai
rdI
nvest
ment
Addit
ionali
nfor
mat i
on:·Thelandandbui ldingwer eacquiredonApri
l1,20x0.·Theshar e
capit
alwasissuedonMar ch1, 20x0.·Sales, purchases,andexpenses(exceptint
erest
expense)wereincurr
edevenlyduringthey ear.·Interestexpensewasrecognizedandpaid
onDecember31, 20x2.·Div
idendsof₱120, 000wer edeclaredandpaidonDecember31,
20x2.·Sel
ectedvaluesofgeneralpri
ceindi ces(CPI )areshownbelow: Howmuchi st he
gain(l
oss)onnetmonet ar
yposi t
ion(purchasi ngpowergai norl
oss)
?
28,
240
, OnJanuar y1,1990,PoeCorp.soldamachi nefor₱900,000toSaxeCor p.
,i
tswholl
y-
owned
subsidiary.Poepaid₱1,100,
000fort hi
smachine,whichhadaccumul at
eddepreci
ati
onof
₱250,000.Poeest i
mateda₱100, 000salvageval
ueanddepr eciat
edthemachineonthe
str
aight-l
inemet hodover20years,apolicywhi
chSaxecont i
nued.InPoe'sDecember31,
1990, consoli
datedbalancesheet,t
hismachineshouldbeincludedincostand
accumul ateddepreciat
ionas:
1,
100,
000300,
000
OnDecember15, 20x1,ABCCo.purchasedgoodsf r
om aKor eanfi
rmf or40,000wons.ABC
Co.wasconcernedaboutthefl
uct
uationint
heKor eanwon, soont hi
sdat e,
ABCCo.
ent
eredint
oa30- dayforwar
dcontr
acttobuy40,000wonsf or₱49,600from abankatthe
for
wardrateof₱1.24.Howmuchi stheFOREXgai n(loss)onforei
gncurrencytransact
ion
onJanuary15,20x2?
(
1,600)
Whent r
ansl
ati
ngthefinanci
alstat
ementsofaf orei
gnoperat
ion,
ther
esul
tingexchange
di
ff
erencesaft
ertr
anslati
ngallasset
s,l
i
abil
i
ties,equit
y,i
ncomeandexpensesconsist
sof
al
lofthefol
l
owing,except
Tr
ansl
ati
onofendi
ngnetasset
susi
ngopeni
ngandcl
osi
ngr
ates.
Thelandandbui l
dingwer eacqui r
edonApr i
l1,20x0.·Thesharecapitalwasissuedon
March1, 20x0.·Sales,pur chases,andexpenses(excepti
nter
estexpense)wer eincurr
ed
evenl
ydur i
ngthey ear.·Interestexpensewasr ecogni
zedandpai donDecember31, 20x2.
·Divi
dendsof₱120, 000wer edeclaredandpaidonDecember31, 20x2.·Sel
ectedv al
uesof
general
pr i
ceindi
ces( CPI )areshownbel ow:Howmuchi stherestat
edt ot
all
iabil
it
iesinthe
20x1compar ati
vest atementoff inancial
posit
ion?
592,
667
I
tisacont
racti
nwhi
chtwopart
iesagr
eet
oexchangepay
ment
sint
hef
utur
ebasedont
he
movementofsomeagr
eed-
uponpri
ceorr
ate.
Swap
Hall
,Inc.
,enter
sintoacal l
opti
oncontractwithBennettInvest
mentCo.onJanuary2,2002.
Thiscontr
actgivesHalltheopti
ontopur chase1,
000shar esofWSM stockat$100per
share.Theopti
onexpi r
esonApr i
l30,2002.WSM shar esaretradi
ngat$100pershareon
January2,2002,atwhichtimeHallpays$400f orthecallopti
on.Ref
ertoHal
l,I
nc.Thecall
opti
onwoul dber ecor
dedintheaccountsofHal las
anasset
ABCCo.i sacommodi tyt
rader.OnDecember1, 20x1,ABCCo.car r
iesinit
sinventory400
troyouncesofgol dv al
uedat₱4, 800,
000( or₱12,
000pert r
oyounce).ABCCo.measur es
i
tsi nvent
oryofgol datfai
rvaluelesscoststosellt
hroughprof
itorloss.Toprotectthefai
r
valueofitsinventoryagai
nstapot enti
aldecli
neinpri
ces,ABCCo.ent er
sintoa“ short
”
futurescontractonDecember1, 20x1tosell400tr
oyouncesofgoldat₱12, 100pert roy
ingCorp.accountsfori
nventor
yonaFI FObasis.Therewere8,
000uni t
sin
i
nv entor
yonJanuar y1,20x3.Costswereincurr
edandgoodspur chasedasfoll
owsdur i
ng
20x3: Ri
ceestimatesthatthecurr
entcostperunitofi
nventor
ywas₱57atJanuar y1,20x3,
and₱71atDecember31, 20x3.2.Howmuchi st he20x3costofgoodssoldrestat
edto
currentcost?
1,
920,
000
Enti
tyAhasj uststart
editsoperat
ionsonJanuary1, 20x1.Onthi
sdat e,
Ent i
tyA’sequity
consist
edof₱2M shar ecapital
,whichwereissuedalsoont hi
sdate.Entit
yA’ sfunct
ional
curr
encyisthePhilippi
nepeso( ₱).However
,itwishestopresentit
s20x1f inancial
stat
ement si
ntoJapanesey en(¥).Thefol
l
owi nginformati
onwasgat heredonDecember31,
20x1,aft
eray earofoperati
ons.4.Howmuchi sthetransl
atedprof
itorloss?
C.Y9M
Accordi
ngtoPFRS7, i
tist
heriskt
hatthefai
rval
ueorfut
urecashfl
owsofaf
inanci
al
i
nstrumentwi
ll
fluct
uatebecauseofchangesi
nforei
gnexchanger
ates.
Cur
rencyr
isk
OnDecember15, 20x1,ABCCo.pur chasedgoodsf r
om aKoreanfi
rmf or40,000wons.ABC
Co.wasconcernedaboutt hef
luctuati
oni nt
heKor eanwon,soont hi
sdat e,
ABCCo.
ent
eredi
ntoa30- dayforwardcontracttobuy40,000wonsf or₱49,600from abankatthe
for
wardr
ateof₱1. 24.Assumingt heforwardcontracti
ssettl
edonanetcashbasi s,how
muchisthenetcashset t
lementreceipt(pay
ment )onJanuary15,20x2?
2,
400
Di
scl
osur
eofi
nfor
mat
ionaboutsi
gni
fi
cantconcent
rat
ionsofcr
edi
tri
ski
srequi
redf
or:
Al
lfi
nanci
ali
nst
rument
s
Hall
,Inc.
,ent
ersi ntoacall
opti
oncontractwi t
hBennet tI
nv estmentCo.onJanuary2,2002.
Thiscontr
actgi v
esHalltheopti
ontopur chase1,000shar esofWSM st ockat$100per
share.Theoptionexpir
esonApr i
l30,2002.WSM shar esar et r
adi
ngat$100pershareon
January2,2002, atwhi
chtimeHallpays$400f ort
hecallopt i
on.Assumet hatt
hepri
ceper
shareofWSM st ockis$120onApr i
l30,2002, andthatthet imevalueoftheopti
onhasnot
changed.Inordertosettl
etheopti
oncont ract
,Hall
,Inc.,
woul dmostl i
kel
y
r
ecei
ve$20,
000f
rom Bai
rdI
nvest
ment
Addit
ionali
nfor
mat i
on:·Thelandandbui ldingwer eacquiredonApri
l1,20x0.·Theshar e
capit
alwasissuedonMar ch1, 20x0.·Sales, purchases,andexpenses(exceptint
erest
expense)wereincurr
edevenlyduringthey ear.·Interestexpensewasrecognizedandpaid
onDecember31, 20x2.·Div
idendsof₱120, 000wer edeclaredandpaidonDecember31,
20x2.·Sel
ectedvaluesofgeneralpri
ceindi ces(CPI )areshownbelow: Howmuchi st he
gain(l
oss)onnetmonet ar
yposi t
ion(purchasi ngpowergai norl
oss)
?
28,
240
, OnJanuar y1,1990,PoeCorp.soldamachi nefor₱900,000toSaxeCor p.
,i
tswholl
y-
owned
subsidiary.Poepaid₱1,100,
000fort hi
smachine,whichhadaccumul at
eddepreci
ati
onof
₱250,000.Poeest i
mateda₱100, 000salvageval
ueanddepr eciat
edthemachineonthe
str
aight-l
inemet hodover20years,apolicywhi
chSaxecont i
nued.InPoe'sDecember31,
1990, consoli
datedbalancesheet,t
hismachineshouldbeincludedincostand
accumul ateddepreciat
ionas:
1,
100,
000300,
000
OnDecember15, 20x1,ABCCo.purchasedgoodsf r
om aKor eanfi
rmf or40,000wons.ABC
Co.wasconcernedaboutthefl
uct
uationint
heKor eanwon, soont hi
sdat e,
ABCCo.
ent
eredint
oa30- dayforwar
dcontr
acttobuy40,000wonsf or₱49,600from abankatthe
for
wardrateof₱1.24.Howmuchi stheFOREXgai n(loss)onforei
gncurrencytransact
ion
onJanuary15,20x2?
(
1,600)
Whent r
ansl
ati
ngthefinanci
alstat
ementsofaf orei
gnoperat
ion,
ther
esul
tingexchange
di
ff
erencesaft
ertr
anslati
ngallasset
s,l
i
abil
i
ties,equit
y,i
ncomeandexpensesconsist
sof
al
lofthefol
l
owing,except
Tr
ansl
ati
onofendi
ngnetasset
susi
ngopeni
ngandcl
osi
ngr
ates.
Thelandandbui l
dingwer eacqui r
edonApr i
l1,20x0.·Thesharecapitalwasissuedon
March1, 20x0.·Sales,pur chases,andexpenses(excepti
nter
estexpense)wer eincurr
ed
evenl
ydur i
ngthey ear.·Interestexpensewasr ecogni
zedandpai donDecember31, 20x2.
·Divi
dendsof₱120, 000wer edeclaredandpaidonDecember31, 20x2.·Sel
ectedv al
uesof
general
pr i
ceindi
ces( CPI )areshownbel ow:Howmuchi stherestat
edt ot
all
iabil
it
iesinthe
20x1compar ati
vest atementoff inancial
posit
ion?
592,
667
I
tisacont
racti
nwhi
chtwopart
iesagr
eet
oexchangepay
ment
sint
hef
utur
ebasedont
he
movementofsomeagr
eed-
uponpri
ceorr
ate.
Swap
Hall
,Inc.
,enter
sintoacal l
opti
oncontractwithBennettInvest
mentCo.onJanuary2,2002.
Thiscontr
actgivesHalltheopti
ontopur chase1,
000shar esofWSM stockat$100per
share.Theopti
onexpi r
esonApr i
l30,2002.WSM shar esaretradi
ngat$100pershareon
January2,2002,atwhichtimeHallpays$400f orthecallopti
on.Ref
ertoHal
l,I
nc.Thecall
opti
onwoul dber ecor
dedintheaccountsofHal las
anasset
ABCCo.i sacommodi tyt
rader.OnDecember1, 20x1,ABCCo.car r
iesinit
sinventory400
troyouncesofgol dv al
uedat₱4, 800,
000( or₱12,
000pert r
oyounce).ABCCo.measur es
i
tsi nvent
oryofgol datfai
rvaluelesscoststosellt
hroughprof
itorloss.Toprotectthefai
r
valueofitsinventoryagai
nstapot enti
aldecli
neinpri
ces,ABCCo.ent er
sintoa“ short
”
futurescontractonDecember1, 20x1tosell400tr
oyouncesofgoldat₱12, 100pert roy
