Assume That on January 15, 2021 Aero's Agrees to Purchase

question 1

Multiple Choice

Assume that on January 15, 2021 Aero's agrees to purchase US$50,000 for C$52,000 for delivery on January 15, 2022. The exchange rate at Aero's December 31 year-end is US$1 = C$.98 and the January 15, 2022 exchange rate is US$1 = C$.97. What is the foreign exchange gain or loss recognized at December 31, 2021?

• A)$3,000 loss.
• B)$3,000 gain.
• C)$3,500 loss.
• D)$3,500 gain.

---

Definitions:

Bonded

indicates a state of being secured by a bond, involving a financial guarantee or protection against losses.

Shirking

The act of avoiding or neglecting responsibilities, especially in the workplace, leading to reduced productivity or performance.

Incentive Contracts

Contracts that provide rewards for performance above a certain standard, encouraging higher levels of effort or achievement.

Monitoring

The process of supervising activities or individuals to ensure compliance, performance, or progress towards objectives.