The Balance in Newsprint Corp

question 38

Multiple Choice

The balance in Newsprint Corp.'s foreign exchange loss account was $10,000 on December 31, 20X8, before any necessary year-end adjustment relating to the following:
(1) Newsprint had a $15,000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 20X8.
(2) Newsprint had an account payable to an unrelated foreign supplier, payable in the supplier's local currency unit (LCU) on January 15, 20X9. The U.S. dollar-equivalent of the payable was $50,000 on the December 1, 20X8, invoice date and $53,000 on December 31, 20X8.
Based on the information provided, in Newsprint's 20X8 consolidated income statement, what amount should be included as foreign exchange loss in computing net income, if the U.S. dollar is the functional currency and the remeasurement method is appropriate?

• A) $15,000
• B) $10,000
• C) $25,000
• D) $28,000

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Definitions:

Obsessive-Compulsive Disorder

A mental disorder characterized by recurrent, unwanted thoughts (obsessions) and/or repetitive behaviors (compulsions) that the individual feels driven to perform.

Anxiety-Provoking Thoughts

Thoughts that lead to or exacerbate feelings of anxiety.

Repetitive

Involving or characterized by repetition, often excessively so.

Ritualistic Behaviors

Repetitive and formalized actions, often performed with a symbolic value, typically in religious or cultural contexts.