Assume That Signh Agrees to Purchase US$100,000 for C$84,745 on January

question 24

Multiple Choice

Assume that Signh agrees to purchase US$100,000 for C$84,745 on January 15,2018.The exchange rate at year-end is US$1 = C$1.20 and the January 15,2018 exchange rate is US$1 = C$1.19.What journal entry is required at January 15,2013?

• A) $701 loss.
• B) $701 gain.
• C) $711 loss.
• D) $711 gain.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Unequal Lives

A term used in capital budgeting to describe projects or investments with different durations.

Replacement Chain Method

A capital budgeting technique that compares different investment projects with unequal lifespans by calculating their equivalent annual cost.

Equivalent Annual Annuity

Equivalent Annual Annuity is a calculation used to compare the annualized cash flows of projects or investments with different durations.