On November 1,a French company purchased machinery from an American company for 800,000 Euros when the exchange rate was $0.83.When preparing financial statements on December 31,assuming the rate for Euros was $0.88,what amount of gain or loss should the American company report?

Question

Quizplus · Accepted Answer

The American company would report a $40,000 gain because the value of the Euro increased from $0.83 to $0.88, resulting in a higher dollar value for the same amount of Euros.

On November 1,a French Company Purchased Machinery from an American