On April 1, 2020, P Inc., a Canadian public company, issues 1,250,000 in long-term debt to lenders

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Question:

On April 1, 2020, P Inc., a Canadian public company, issues £1,250,000 in long-term debt to lenders in the Uk. The debt pays interest at an annual rate of 12%, with payments due on March 31 of each year. The debt matures on March 31, 2025. P closes its books on December 31 and prepares its financial statements in Canadian dollars. As a consequence, all amounts relating to this debt must be translated. Relevant exchange rates are as follows:

April 1, 2020 1 Cdn =£ .5741

December 31, 2020 1 Cdn =£ .5744

April 1, 2021 1 Cdn =£ .6646

July 1, 2021 1 Cdn =£ .6505

October 1, 2021 1 Cdn =£ .7050

December 31, 2021 1 Cdn =£ .6951

B. Determine the Interest Expense relating to the long-term debt that will be reported in P’ Income Statement for the year ending December 31, 2020 would be.

C. How much foreign Exchange Gain (Loss) on the long-term debt that would be reported in P Income Statement for the year ending December 31, 2021.