Alpha, Inc

question 46

Multiple Choice

Alpha, Inc., a U.S. company, had a receivable from a customer that was denominated in Mexican pesos. On December 31, 2020, this receivable for 75,000 pesos was correctly included in Alpha's balance sheet at $8,000. The receivable was collected on March 2, 2021, when the U.S. equivalent was $6,900. How much foreign exchange gain or loss will Alpha record on the income statement for the year ended December 31, 2021?

• A) $1,100 loss.
• B) $1,100 gain.
• C) $6,900 loss.
• D) $6,900 gain.
• E) $8,000 gain.

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Definitions:

ADR Techniques

Alternative Dispute Resolution methods, including mediation, arbitration, and negotiation, used to resolve conflicts outside the traditional court system.

Conciliation

A process in which a neutral third party assists disputing parties to reach a mutually agreeable solution.

Arbitration

A process where a dispute is resolved by an impartial third party whose decision the involved parties agree to accept.

Precedent

A tool used by judges to make rulings on cases on the basis of key similarities to previous cases.