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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, 20X8, 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, 20X8, 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:

Respuesta :

Answer:

>$460 gain

Explanation:

According to the given situation, the computation of foreign exchange gain or loss is shown below:-

Foreign exchange gain or loss = Total foreign exchange exposure × (Closing rate - Initial rate)

= >LCU 23,000 × ($1.10 -$1.08)

= >$460 gain

Therefore for computing the foreign exchange gain or loss we simply applied the above formula.

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