Accounting Review 3
Advanced Financial Accounting and Reporting
Direction: Answer the following and show your solutions in good form.
ABC Company sold merchandise for 100,000 dollars to a customer in United Staes on October 31, 2023.
Collection in US Dollar was due on March 1, 2024. On the same date, AB C entered into a 120-day
forward contract to sell 100,000 dollars to a writer. Direct exchange rate for dollars on different dates are
as follows:
Oct 31, 2023 Dec 31, 2023 Jan 30, 2024 March 1, 2024
Spot rate 52.6 52.1 51.8 53.9
30-day forward 50.2 52.3 50.4 52.5
60-day forward 52.2 52.4 53.1 51.2
90-day forward 51.7 52.1 52.5 53.8
120-day forward 52.5 52.5 53.3 53.4
1. What is the net foreign currency gain/(loss) due to hedging activity for the year ended December 31,
2023?
2. What is the net foreign currency gain/(loss) due to hedging activity for the year ended December 31,
2024?
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ABC Foundation received the following donations:
• Cash of P1,500,000 internally restricted by the board of trustees
• Cash of P200,000 restricted by the donor for rental payments.
• Cash donation of P3,000,000 to be invested perpetually.
ABC Foundation paid rental for the year using P200,000. The investment yielded a dividend income of
P100,000 cash for the year, which shall be used for calamity projects.
3. How much is the amount of cash receipts/(disbursements) from Operating, Investing and Financing
Activities of the Statement of Cash Flows for the year?
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A foreign subsidiary presented the following on its first year of operations:
Total Assets HK$ 1,470,000
Total liabilities 294,000
Ordinary Shares 735,000
Net Income 441,000
The exchange rates were: Current rate, P9.25; Historical rate for equity, P8.50; Weighted average rate,
P9.00.
4. Compute the cumulative translation gain/(loss) for the year.
