Accounting · Foreign Currency Transactions
Beta Co uses US dollars ($) as its functional currency. On 10 August 20X5, Beta Co purchased goods on credit for €1,500,000. On 10 September 20X5, Beta Co paid 50% of the invoiced amount. According to the terms of the contract, the balance is payable on 10 October 20X5. Beta Co's year-end is 30 September 20X5. The exchange rates were as follows: 10 August 20X5: €1 = $1.2510 September 20X5: €1 = $1.2330 September 20X5: €1 = $1.26 Which of the following amounts should be reported in Beta Co's financial statements for the year ended 30 September 20X5?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Net Exchange loss $15,000 and foreign trade payable $937,500
- 2Net Exchange gain $7,500 and foreign trade payable $945,000✓
- 3Net Exchange loss $4,994 and foreign trade payable $595,238
- 4Net Exchange gain $4,762 and foreign trade payable 595,238
Correct answer
Net Exchange gain $7,500 and foreign trade payable $945,000
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