Answered: Date Amount July 1, 2017 (date…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2018. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows:
In its 2018 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note?
a. $15,000 gain
b. $15,000 loss
c. $10,000 gain
d. $10,000 loss

Date
Amount
July 1, 2017 (date borrowed)
December 31, 2017 (Mifflin's year-end)
July 1, 2018 (date repaid) ..
$225,000
210,000

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