Company X Denominated a December 1,2009,purchase of Goods in a Currency

question 35

Multiple Choice

Company X denominated a December 1,2009,purchase of goods in a currency other than its functional currency.The transaction resulted in a payable fixed in terms of the amount of foreign currency,and was paid on the settlement date,January 10,2010.Exchange rates moved unfavourably at December 31,2009,resulting in a loss that should:

• A)be included as a separate component of stockholders' equity at Dec.31,2009.
• B)be included as a component of income from continuing operations for 2009.
• C)be included as a deferred charge at December 31,2009.
• D)not be reported until January 10,2010,the settlement date.

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Definitions:

Market Price

The current value at which an asset or service can be bought or sold in an open market.

Economies of Scale

The economic benefits that businesses gain from their size of operations, where the expense per unit of production typically lowers as the scale increases.

Increasing Returns

A situation in which an increase in the scale of production results in a disproportionate increase in output, usually leading to lower average costs.

Suffer Losses

occurs when a business or individual incurs expenses that exceed their revenues.