_____ Parco's German subsidiary is Sarco. On 12/31/05, Parco concluded that the euro would weaken during the remainder of 2006. On this date, Sarco's balance sheet in euros was as follows:
Sarco's functional currency is the U.S. dollar. On 12/31/05, Parco entered into a 12-month FX forward to sell 100,000 euros at the forward rate of $.60 (the spot rate at the time was also $.60). On 12/31/06, Parco settled the FX forward when the direct exchange rate was $.56. Using only the above information, what is the net amount Parco reports in its FX Gain or Loss account (that includes the remeasurement gain or loss) for 2006?

Question

_____ Parco's German subsidiary is Sarco. On 12/31/05, Parco concluded that the euro would weaken during the remainder of 2006. On this date, Sarco's balance sheet in euros was as follows:
 Sarco's functional currency is the U.S. dollar. On 12/31/05, Parco entered into a 12-month FX forward to sell 100,000 euros at the forward rate of $.60 (the spot rate at the time was also $.60). On 12/31/06, Parco settled the FX forward when the direct exchange rate was $.56. Using only the above information, what is the net amount Parco reports in its FX Gain or Loss account (that includes the remeasurement gain or loss) for 2006?

Quizplus · Accepted Answer

The Answer of _____ Parco's German subsidiary is Sarco. On 12/31/05, Parco concluded that the euro would weaken during the remainder of 2006. On this date, Sarco's balance sheet in euros was as follows:
 Sarco's functional currency is the U.S. dollar. On 12/31/05, Parco entered into a 12-month FX forward to sell 100,000 euros at the forward rate of $.60 (the spot rate at the time was also $.60). On 12/31/06, Parco settled the FX forward when the direct exchange rate was $.56. Using only the above information, what is the net amount Parco reports in its FX Gain or Loss account (that includes the remeasurement gain or loss) for 2006?

_____ Parco's German Subsidiary Is Sarco