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$8,000 loss resulting from the translation of the accounts of its
wholly owned foreign subsidiary for the year ended December 31,
2005. Fay had an account payable to an unrelated foreign
supplier payable in the supplier's local currency. The U.S. dollar
equivalent of the payable was $64,000 on the October 31, 2005
invoice date, and it was $60,000 on December 31, 2005. The
invoice is payable on January 30, 2006. In Fay's 2005 consolidated
income statement, what amount should be included as foreign
exchange loss?
Question 6
Gains from remeasuring a foreign subsidiary's financial
statements from the local currency, which is not the functional
currency, into the parent company's currency should be reported
as a(an)
Question 7
The following information pertains to Flint Co.'s sale of 10,000
foreign currency units under a forward contract dated November
1, 2004, for delivery on January 31, 2005: Flint entered into the
forward contract in order to speculate in the foreign currency. In
Flint's income statement for the year ended December 31, 2004,
what amount of loss should be reported from this forward
contract?
Question 8
In 2003, a personal injury lawsuit was brought against Halsey Co.
Based on counsel's estimate, Halsey reported a $50,000 liability in
its December 31, 2003, balance sheet. In November 2004, Halsey
received a favorable judgment, requiring the plaintiff to
reimburse Halsey for expenses of $30,000. The plaintiff has
appealed the decision, and Halsey's counsel is unable to predict