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Fay Corp. had a realized foreign exchange loss of $15,000 for
the year ended December 31, 2005 and must also determine
whether the following items will require year-end adjustment:
Fay had an $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