Winston Corp

question 79

Multiple Choice

Winston Corp., a U.S. company, had the following foreign currency transactions during 2013:
(1) ) Purchased merchandise from a foreign supplier on July 16, 2013 for the U.S. dollar equivalent of $47,000 and paid the invoice on August 3, 2013 at the U.S. dollar equivalent of $54,000.
(2) ) On October 15, 2013 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-bearing note payable in euros on October 15, 2013. The U.S. dollar equivalent of the note amount was $295,000 on December 31, 2013, and $299,000 on October 15, 2014.
What amount should be included as a foreign exchange gain or loss from the two transactions for 2013?

• A) $9,000 loss.
• B) $9,000 gain.
• C) $11,000 loss.
• D) $13,000 gain.
• E) $14,000 gain.

Recognize how dividends and net income or loss from investees are handled under the equity method.

Distinguish between the cost method, equity method, and fair value models for accounting investments.

Identify the implications of significant influence and control in relation to investment accounting.

Comprehend how an investment's carrying amount is affected under different accounting methods.

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Definitions:

Carrying Amount

The book value of an asset or liability as reported on a company's balance sheet, representing its original cost adjusted for any depreciation, amortization, or impairment charges.

Interest Payment

The amount paid by a borrower to a lender, typically at a set interval, for the use of borrowed money.

Accumulated Depreciation

The total amount of a tangible fixed asset's cost that has been allocated as depreciation expense since the asset was put into use.

Cash Fund

A cash fund is a reserve of liquid money that a business or individual keeps on hand for meeting short-term obligations or emergencies.