A U.S. company makes a sale to a Brazilian company for 10,000 reais on March 15. The Brazilian company will pay on May 1. The exchange rate on March 15 is 1 real = $0.529 and on May 1 is 1 real = $0.480. The average rate was 1 real = $0.505. The U.S. company will record the sale on March 15 as

Question

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The U.S. company should record the sale using the exchange rate on the date of the transaction, which is March 15. Therefore, the sale was for $5,290 ($0.529 x 10,000 reais). The fact that the payment will be received on May 1 and that the exchange rate may fluctuate does not impact the initial recording of the sale.

A US Company Makes a Sale to a Brazilian Company for for 10,000