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On July 1,2014,when the spot rate was US$1=CDN$1.1445,North Inc,based in the Alberta,ordered merchandise from an American supplier for US$600,000.Delivery was scheduled for the month of September,with payment to be made in full by December31,2014.
Once the order was placed,North entered into a forward contract with its bank to purchase US$600,000 in December at the forward rate of $1.1625CDN.The merchandise was received on October 1,2014,when the spot rate was US$1=$1.1575CDN.On October 31,the company's year-end,the spot rate was $1.1690.North purchased the U.S.dollars to pay its supplier on November 15,2014 when the spot rate was $1.1725CDN.
-What is the amount of North's deferred exchange gain or loss arising from this transaction?

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The forward rate is higher than the spot rate on the date of the forward contract, so North will have a deferred exchange gain. The gain is calculated as the difference between the forward rate and the spot rate on the date of payment, multiplied by the amount of the transaction. In this case, the gain is ($1.1725 - $1.1625) x $600,000 = $7,800.

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