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 a foreign currency gain (loss) of

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The U.S. company will record a foreign currency loss because the exchange rate decreased from $0.529 to $0.480, resulting in a lower dollar value when the payment is received. The loss is calculated as (10,000 * $0.529) - (10,000 * $0.480) = $5,290 - $4,800 = $490.

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