Brisco Bricks Purchases Raw Material from Its Foreign Supplier, Bolivian

question 12

Multiple Choice

Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end. The pertinent exchange rates were as follows: $$\begin{array} { | l | l | l | } \hline \text { May 8 } & \text { Spot rate: } & \$ 1.25 \\\hline \text { May 31 } & \text { Spot rate: } & \$ 1.26 \\\hline \text { Jun. 7 } & \text { Spot rate: } & \$ 1.20 \\\hline\end{array}$$ How much Foreign Exchange Gain or Loss should Brisco record on May 31?

• A)$2,520,000 gain.
• B)$20,000 gain.
• C)$20,000 loss.
• D)$80,000 gain.
• E)$80,000 loss.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.