Winston Corp

question 57

Multiple Choice

Winston Corp., a U.S. company, had the following foreign currency transactions during 2013:
(1) ) Purchased merchandise from a foreign supplier on July 16, 2013 for the U.S. dollar equivalent of $47,000 and paid the invoice on August 3, 2013 at the U.S. dollar equivalent of $54,000.
(2) ) On October 15, 2013 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-bearing note payable in euros on October 15, 2013. The U.S. dollar equivalent of the note amount was $295,000 on December 31, 2013, and $299,000 on October 15, 2014.
What amount should be included as a foreign exchange gain or loss from the two transactions for 2014?

• A) $1,000 loss.
• B) $1,000 gain.
• C) $2,000 loss.
• D) $4,000 gain.
• E) $4,000 loss.

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Definitions:

Carcinogen

A substance or agent causing cancer in living tissue, which can affect humans through exposure to certain chemicals, radiation, or other environmental factors.

Biomagnification

The process by which the concentration of toxic substances increases in each successive link in the food chain.

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Acquired Immunodeficiency Syndrome, a life-threatening condition caused by the human immunodeficiency virus (HIV), leading to a severely weakened immune system.

Outdoor Pollutants

Harmful substances present in the outdoor environment, often resulting from industrial activities, vehicle emissions, and natural sources, leading to air, water, and soil pollution.