On December 1, 20X5, Gillard Ltd

question 48

Multiple Choice

On December 1, 20X5, Gillard Ltd. sold goods to International Traders Ltd., a company located in Switzerland, for 500,000 Swiss francs (CHF) . At the date of sale, the spot rate was CHF1 = $1.0329. On the same date, Gillard acquired a 90-day forward contract at a rate of CHF1 = $1.0315. On March 1, 20X6, Gillard received full payment from International Traders and delivered the Swiss francs in execution of the forward contract. The spot rate at March 1, 20X6, was CHF1 = $1.0287.
-What is the net exchange gain (loss) on the forward contract?

• A)$(2,100)
• B)$(700)
• C)$700
• D)$1,400

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Definitions:

Shareholders Meeting

A formal gathering of the shareholders of a company to discuss and vote on company business.

Special Meeting

A meeting called for a specific purpose, outside of the regularly scheduled sessions.

Cumulative Voting

A system of voting for directors of a corporation in which shareholders can concentrate their votes on one candidate, rather than having to distribute them equally among candidates.

Majority Shareholder

An individual or entity that owns more than half of a company's outstanding shares, giving them controlling interest.