On December 5,20X8,Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR),to be paid on January 10,20X9.The transaction is denominated in Saudi riyals.Imperial's fiscal year ends on December 31,and its reporting currency is the U.S.dollar.The exchange rates are:

-Based on the preceding information,what was the overall foreign currency gain or loss on the accounts payable transaction?
A)$300 loss
B)$200 loss
C)$100 gain
D)$200 gain

Question

On December 5,20X8,Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR),to be paid on January 10,20X9.The transaction is denominated in Saudi riyals.Imperial's fiscal year ends on December 31,and its reporting currency is the U.S.dollar.The exchange rates are:
 
-Based on the preceding information,what was the overall foreign currency gain or loss on the accounts payable transaction?
A)$300 loss 
B)$200 loss 
C)$100 gain 
D)$200 gain

Quizplus · Accepted Answer

The overall foreign currency gain on the accounts payable transaction is $100. This is typically calculated by comparing the currency exchange rate at the time of the transaction with the exchange rate at the time of settlement. A gain occurs if the foreign currency strengthens against the domestic currency between the transaction date and the settlement date, reducing the amount of domestic currency needed to settle the payable.

On December 5,20X8,Texas Based Imperial Corporation Purchased Goods from a Saudi