On March 1, 2017, Silver Corp. sold goods to a Chinese company for 10,000 Chinese yuan (10,000 RMB) to be paid on April 1, 2017. The exchange rates on March 1 and April 1, 2017 are US$8.0 = 1 RMB and US$8.5 = 1 RMB, respectively. What is Silver's revenue in US dollars and its 2017 exchange gain or loss?

Question

Quizplus · Accepted Answer

Silver Corp.'s sales revenue is calculated using the exchange rate on the date of sale, March 1, 2017, which is US$8.0 per RMB. Therefore, the revenue is 10,000 RMB * US$8.0 = US$80,000. By April 1, 2017, the exchange rate changed to US$8.5 per RMB, resulting in an exchange gain of (10,000 RMB * US$8.5) - US$80,000 = US$5,000.