Melton Company sold equipment to a Canadian company for 100,000 Canadian dollars (C$) on January 1, 20X9, with settlement to be in 60 days. On the same date, Melton entered into a 60-day forward contract to sell 100,000 Canadian dollars at a forward rate of 1 C$ = $0.94 in order to manage its exposed foreign currency receivable. The forward contract is not designated as a hedge. The spot rates were: January 1, 20X9 March 1, 20X9 1 C$=$0.945 1 C$=$0.930 Based on the preceding information, the entry to revalue foreign currency payable to current U.S. dollar value on March 1 will have: O a credit to Foreign Currency Transaction Gain for $1,000. O a credit to Foreign Currency Transaction Gain for $1.500.

Melton Company sold equipment to a Canadian company for 100,000 Canadian dollars (C$) on January 1, 20X9, with settlement to be in 60 days. On the same date, Melton entered into a 60-day forward contract to sell 100,000 Canadian dollars at a forward rate of 1 C$ = $0.94 in order to manage its exposed foreign currency receivable. The forward contract is not designated as a hedge. The spot rates were: January 1, 20X9 March 1, 20X9 1 C$=$0.945 1 C$=$0.930 Based on the preceding information, the entry to revalue foreign currency payable to current U.S. dollar value on March 1 will have: O a credit to Foreign Currency Transaction Gain for $1,000. O a credit to Foreign Currency Transaction Gain for $1.500.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 22PC

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