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.

---

Definitions:

Revenues

The gross income a business earns from its fundamental activities, specifically through selling goods or offering services.

Opportunity Cost

The cost of forfeiting the next best alternative when making a decision to pursue a particular action.

Spain

A country located on the Iberian Peninsula in southwestern Europe, known for its rich history, cultural diversity, and significant contributions to art, literature, and global exploration.

TVs

Short for televisions, electronic devices designed for receiving and displaying video and audio signals, providing entertainment, information, and often educational content to viewers.