A U.S.firm has purchased, for 50,000 FC, an electric generator from a foreign firm.The exchange rates were 1 FC = $0.80 on the delivery date and 1 FC = $0.76 when the payable was paid.What is the final recorded value of the equipment if the two-transaction method is used?

Question

Quizplus · Accepted Answer

The final recorded value of the equipment is $40,000, calculated by multiplying the purchase amount in foreign currency (50,000 FC) by the exchange rate on the delivery date (1 FC = $0.80), resulting in 50,000 FC * $0.80/FC = $40,000.

A USfirm Has Purchased, for 50,000 FC, an Electric Generator from from a Foreign