Parker Corp

question 76

Multiple Choice

Parker Corp., a U.S. company, had the following foreign currency transactions during 2013:
(1) ) Purchased merchandise from a foreign supplier on July 5, 2013 for the U.S. dollar equivalent of $80,000 and paid the invoice on August 3, 2013 at the U.S. dollar equivalent of $82,000.
(2) ) On October 1, 2013 borrowed the U.S. dollar equivalent of $872,000 evidenced by a non-interest-bearing note payable in euros on October 1, 2013. The U.S. dollar equivalent of the note amount was $860,000 on December 31, 2013, and $881,000 on October 1, 2014.
What amount should be included as a foreign exchange gain or loss from the two transactions for 2013?

• A) $2,000 loss.
• B) $2,000 gain.
• C) $10,000 gain.
• D) $14,000 loss.
• E) $14,000 gain.

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Definitions:

Discrete-event

Pertains to a type of simulation modeling that represents systems as a series of distinct events occurring at specific points in time.

Deterministic Modeling

A mathematical approach used in planning and decision-making that assumes a certain outcome based on known variables, without accounting for randomness or uncertainty.

Mixed-mode

A method or approach that combines different methods or styles, often seen in research methodologies or learning environments.

Risk Management

The process of identifying, assessing, and controlling threats to an organization's capital and earnings.