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# Problem 1. X Trading purchase goods from Y.

## a company based in US for 1,200,000

dollar (\$). The exchange rate at this time is P1 = \$12.5. X pays 30 days later when the
Prevailing exchange rate is P1 = \$16.
How much is the foreign currency gain/loss on the books of X and Y respective?
A. P21,000 gain; P21,000 loss
B. P21,000 gain; 0
C. P4,2000,000 loss; 0
D. P4,200,000 loss; 0
Problem 2. Manila company purchased merchandise for 300,000 pounds from a vendor in
London on November 30, 2022. Payment in British pounds was due on January 30, 2023.
The exchange rates for the British pounds were as follows:
Sports rate
30-day rate
60-day rate

\$1.65
\$1.62
1.64
1.59
1.63
1.56

## December 31, 2022

In its December 31, 2022 income statement, what is the amount to be reported by Manila
Company as foreign exchange difference?
A. P9,000 gain
B. P3,367 loss
C. P3,367 gain
D. P9,000 loss

Problem 4. The following are taken from the records of Elite imports company, a foreign
subsidiary in New Zealand.
NZ dollar
Total Assets
12/31/15
146,000
Total Liabilities
12/31/15
45,000
Common Stock
12/31/15
60,000
Retained Earnings
01/01/15
29,000
Net Income
2015
15,000
Dividends Declared
12/31/15
3,000
Exchange rates:
Current rate
Historical rate
Weighted average rate

P10
11
12

## What amount of cumulative translation adjustment is to be reported in the consolidated

Statement of Financial Position on December 31, 2015?
A. P122,000 debit
B. P166,000 credit
C. P125,000 debit
D. P125,000 credit
Problem 8. GWA Corporation of Makati paid P1,128,750 for a 35% interest in KYJ
Company of Taiwan on January 1, 2022, when KYJ net asset totaled 375,000 NT Dollar
and the exchange rate for NT Dollar was P8.60. A summary of change in KYJs net assets
during 2022 is as follows:
NT Dollar
Exchange Rates
Net assets, January 1
375,000
P8.60
Net income for 2022
75,000
8.55
Dividends paid for 2022
25,000
8.54
GWA Corporation anticipated a strengthening of the Philippines peso against the NT
Dollar during the last half of 2022, and it borrowed 150,000 NT Dollar from a Taiwanese
bank for one year at 10% interest on July !, 2022 to borrowed was P8.55. The loan was
denominated in NT dollar and the current exchange rate at December 31, 2022 was
P8.50.
The other comprehensive income - translation adjustment presented in equity in 2022 as a
result of hedging:
A. P6,587.50
B. P14,087.50
C. P20,675
D. P0

## Problem 10. The A Company acquired the B Company, a foreign subsidiary, on

September 10, 2015. The fair value of the assets of B was the same as their carrying
amount except for land where the fair value was \$50,000 greater than carrying amount.
This fair value adjustment has not been recognized in the separate financial statement of
B. Consolidated financial statement are prepared at year end December 31, 2015
requiring translation of all foreign operations results into the presentation currency of
pesos. The following rates of exchange have been identified.
September 10, 2015
December 31, 2015
Average rate for the year ended December 31, 2015
Average rate for the period from September 10 to December 31, 2015

\$1.63 : P1
\$1.56 : P1
\$1.60 : P1
\$1.58 : P1

What fair value adjustment is required to the carrying amount of land in the consolidate
Statement of financial position?
A. P30,864
B. P31,250
C. P32,051
D. P31,646