Assume that on January 15, 2021 Aero's agrees to purchase US$50,000 for C$52,000 for delivery on January 15, 2022. The exchange rate at Aero's December 31 year-end is US$1 = C$.98 and the January 15, 2022 exchange rate is US$1 = C$.97. What is the foreign exchange gain or loss recognized at January 15, 2022?
A)$500 loss.
B)$500 gain.
C)$3,500 loss.
D)$3,500 gain.

Question

Quizplus · Accepted Answer

The exchange rate moved from C$1.04 (C$52,000/US$50,000) to C$0.97, resulting in a loss of C$0.07 per US$1. For US$50,000, this is a C$3,500 loss (US$50,000 * C$0.07).

Assume That on January 15, 2021 Aero's Agrees to Purchase