Assume That Ariel Agrees to Purchase US$500,000 for C$550,000 on January

question 92

Multiple Choice

Assume that Ariel agrees to purchase US$500,000 for C$550,000 on January 15,2017.The exchange rate at year-end is US$1 = C$0.95 and the January 15,2017 exchange rate is US$1 = C$0.97.What journal entry is required when the contract is initiated?

• A) 0
• B) $65,000 loss.
• C) $75,000 gain.
• D) $75,000 loss.

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Definitions:

Capitalized

The process of recording a cost as an asset, rather than an expense, enabling the cost to be expensed over the useful life of the asset rather than immediately at the time of purchase.

Architectural Fees

These are fees charged by architects for the design, planning, and oversight of a construction project.

Building Cost

The total expenses incurred to construct a building, including materials, labor, and other direct and indirect costs.

Demolition

The process of tearing down buildings or structures, typically to clear land for new construction or due to the structure being unsafe.