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International Finance

Q11-7 When are foreign currency transaction gains or losses recognized in the financial statements? Where
are these gains or losses reported in the financial statements?

Q11-8 Sun Company, a U.S. corporation, has an account payable of $200,000 denominated in Canadian
dollars. If the direct exchange rate increases, will Sun experience a foreign currency transaction gain or
loss on this payable?

Solution Preview

Q11-7 When are foreign currency transaction gains or losses recognized in the financial statements? Where
are these gains or losses reported in the financial statements?

Foreign currency transaction gains or losses are recognized at each balance sheet date and on the day that the transaction is settled.
Gains and losses on those foreign currency transactions are generally ...

Solution Summary

This solution is comprised of detailed explanation to the following questions:

When are foreign currency transaction gains or losses recognized in the financial statements? Where
are these gains or losses reported in the financial statements?

Sun Company, a U.S. corporation, has an account payable of $200,000 denominated in Canadian
dollars. If the direct exchange rate increases, will Sun experience a foreign currency transaction gain or
loss on this payable?

$2.19