Mint Corporation Has Several Transactions with Foreign Entities

question 18

Multiple Choice

Mint Corporation has several transactions with foreign entities.Each transaction is denominated in the local currency unit of the country in which the foreign entity is located.On November 2,2008,Mint sold confectionary items to a foreign company at a price of LCU 23,000 when the direct exchange rate was 1 LCU = $1.08.The account has not been settled as of December 31,2008,when the exchange rate has increased to 1 LCU = $1.10.The foreign exchange gain or loss on Mint's records at year-end for this transaction will be:

• A)$460 loss
• B)$387 loss
• C)$387 gain
• D)$460 gain

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Definitions:

Self-Sufficient

refers to the ability of an individual, community, or country to provide for all their needs independently, without external assistance.

Trading Partner

A country, organization, or entity with which a business or country conducts trade, sharing a mutual economic exchange.

Trade Price

The price at which goods or services are traded between parties, often wholesale prices between manufacturers and retailers.

Political Economy

An interdisciplinary branch that studies the relationship between individuals, societies, and governments, focusing on how economic theories affect policies and social issues.