Question: NWT Ltd. is an outfitter based in Yellowknife that caters mainly to American clients. On January 1, 20X1, NWT Ltd. borrows US$ 300,000 from Norse

NWT Ltd. is an outfitter based in Yellowknife that caters mainly to American clients. On January 1, 20X1, NWT Ltd. borrows US$ 300,000 from Norse bank of St. Paul, Minnesota. The annual interest rate is 5%, the term of the loan is four years, and interest is payable annually on December 31. Principal is to be repaid on December 31, 20X4. The relevant foreign exchange rates for 20X1 and 20X2 are:
January 1, 20X1..................... C$ 1.10 = US$ 1.00
December 31, 20X1..................... C$ 1.13 = US$ 1.00
December 31, 20X2................... C$ 1.07 = US$ 1.00

Required
Calculate the exchange gain/ loss on the loan principal for 20X1 and 20X2 that will appear on the financial statements of NWT Ltd.

Step by Step Solution

★★★★★

3.36 Rating (152 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

For the yearended December 31 20X1 an exchan... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

424-B-A-G-F-A (5691).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

On January 1 20X1 Alpha Inc purchased 400000 95 bonds of Theta Limited The bonds pay interest annually every December 31 and would mature on December 31 20x5 The bonds were acquired to yield 1025...

Write out the equilibrium constant expressions for the following reaction: N2 (g) + O2 (g) 2 NO (g)

Table 19.1 lists foreign exchange rates for August 3, 2011. On that day, how many dollars would be required to purchase 1,000 units of each of the following: British pounds, Canadian dollars, EMU...

Conlon Chemicals manufactures paint thinner. Information on the work in process follows: Beginning inventory, 40,000 partially complete gallons. Transferred out, 212,000 gallons. Ending inventory...

Stony Mountain Ltd. operates hunting outfitter shops throughout Canada. Excerpts from Stony Mountain's financial statements are provided below: STONY MOUNTAIN LTD. Balance Sheet (partial) Current...

Wildhorse, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a smartphone. The cost...

Stony Mountain Ltd. operates hunting outfitter shops throughout Canada. Excerpts from Stony Mountain's financial statements are provided below: STONY MOUNTAIN LTD. Balance Sheet (partial) December 31...

Crane Inc. issues 500 shares of $10 par value common stock and100 shares of $100 par value preferred stock for a lump sum of$101,000. a. Prepare the journal entry for the issuance when themarket pr 2...

in May. Revita de produced 22.000 cases of powdered drink mix and sold 23.000 cases, of which 1,000 were produced in April. The total April production was 13.000. The sales price was $29, variable...

Suppose that on December 31, 2009, Procter & Gamble issued a bond with the following terms Face Value $12,000,000 Maturity 10 years Coupon Rate (annualized) 10% Compounding Period Market interest...

31. Catalytic Cracker Unit (Cat Cracker) feed usually comes from the a. Straight-run heavy gas oil b. Straight-run gasoline c. Flasher bottoms d. The Crude Oil Charge Pump

On May 10, Whispering Winds Corp. issues 2,600 shares of $ 4 par value common stock for cash at $ 12 per share. Journalize the issuance of the stock. (Credit account titles are automatically indented...

Carl writes a check for $ 5 0 0 , payable to the order of Fred. Fred owes Greta $ 6 0 0 , so Fred changes the 5 to a 6 and endorses it over it to Greta to pay the debt. Which of the following...

4. Which of the following is not one of the perspectives from which the balanced scorecard views the company? a. Financial perspective c. Internal business perspective b. Customer perspective d....

Select the most appropriate answer for each of the following questions. 1. Goodwill is a. Seldom reported because it is too difficult to measure. b. Reported when more than book value is paid in...

Select the correct answer for each of the following questions. 1. On January 1, 20X1, Prim Inc. acquired all of Scrap Inc.s outstanding common shares for cash equal to the stocks book value. The...

Assume semiannual compounding, what is the price of a 17-year, zero coupon bond paying $1,000 at maturity if the YTM is (Do not round intermediate calculations and round your final answers to 2...

FIFO tends to decrease cost of goods sold when: options: a) costs are increasing b) costs are decreasing c) costs are constant d) taxes are decreasing

Tasman Products, Limited, of Australia has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to...