Interfast Corporation, a fastener manufacturer, has recently been expanding its sales through exports to foreign markets. Earlier this year, the company negotiated the sale of several thousand cases of fasteners to a wholesaler in the country of Loznia. The customer is unwilling to assume the risk of having to make payment in Canadian dollars. Desperate to enter the Loznian market, the vice-president for international sales agrees to denominate the sale in lrubles (LR), the national currency of Loznia. The current exchange rate for the lruble is $2. In addition, the customer indicates that he cannot make payment until all of the fasteners have been sold. Payment of LR200,000 is scheduled for six months from the date of sale.
Have the accountants made a mistake? Does the company have a loss, a gain, or both from this forward contract? Explain.

  • CreatedJune 09, 2015
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