On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing
Question:
On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2018. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows:
Date ............................................................................................Amount
July 1, 2017 (date borrowed) . . . . . . . . . . . . . . . . . . . . . . . . . $225,000
December 31, 2017 (Mifflin's year-end). . . . . . . . . . . . . . . .... 220,000
July 1, 2018 (date repaid) . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 210,000
In its 2018 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note?
a. $15,000 gain
b. $15,000 loss
c. $10,000 gain
d. $10,000 loss
Step by Step Answer:
Fundamentals of Advanced Accounting
ISBN: 978-1259722639
7th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik