Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received on January 15, 2012. The following exchange rates applied:

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2012 income statement related to this transaction?

A) $500 (gain).
B) $305 (gain).
C) $300 (gain).
D) $300 (loss).
E) $0.

Question

Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received on January 15, 2012. The following exchange rates applied:

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2012 income statement related to this transaction?

A) $500 (gain). 
B) $305 (gain). 
C) $300 (gain). 
D) $300 (loss). 
E) $0.

Quizplus · Accepted Answer

The Answer is B

Car Corp (A U