FOREIGN EXCHANGE TRANSACTIONS & TRANSLATION

lumongsod cykee hanna

ASSIGNMENT

Problem A
Date of transaction (shipment): December 2, 2013 S
Balance Sheet Date: December 31, 2013
Foreign Currency Exchange Gain per pound
Multiplied by: Number of pounds
Foreign Currency Exchange Gain/Loss per pound

Problem B
Balance Sheet Date: December 31, 2013 @ BID rate
Settlement Date: January 30, 2014 @ BID rate
Foreign Currency Exchange Gain per pound
Multiplied by: Number of pounds
Foreign Currency Exchange Gain/Loss per pound

Problem C
30-Day Forward Rate: December 31, 2013
90-Day Forward Rate: November 1, 2013
Foreign Currency Exchange Gain per BF
Multiplied by: Number of Belgium Francs
Foreign Currency Exchange Gain/Loss\ per BF

Problem D
Notes Payable ₱108,000.00
Interest (P108,000 x 18% x 1/12) ₱1,620.00
Total ₱109,620.00

Problem E
1.) Date of transaction: November 2, 2013
Balance Sheet Date: December 31, 2013
Foreign Currency Exchange Gain per Euro
Multiplied by: Number of Euros
Foreign Currency Exchange Gain/Loss per Euro

2.) Derivative (Fixed Rate): 30-day futures, Dec. 31

Settlement Date: 120-day futures, Nov. 2
Foreign Currency Exchange Gain per Euro
Multiplied by: Number of Euros
Foreign Currency Exchange Gain/Loss per Euro
 3.) Spot Rate: January 31, 2014
30-day futures: Dec. 31, 2013
Foreign Currency Exchange Gain per Euro
Multiplied by: Number of Euros
Foreign Currency Exchange Gain/Loss per Euro

Problem F
1.) Balance Sheet Date: December 31, 2013
Settlement Date: March 31, 2014
Foreign Currency Exchange Gain per US Dollar
Multiplied by: Number of US Dollars
Foreign Currency Exchange Gain/Loss per US Dollar

2.) 120-day futures: Dec. 31, 2013

90-day futures: Dec. 31, 2013
Foreign Currency Exchange Gain per US Dollar
Multiplied by: Number of US Dollars
Foreign Currency Exchange Gain/Loss per US Dollar

3.) Date of transaction: December 1, 2013

Balance Sheet Date: December 31, 2013
Foreign Currency Exchange Gain per US Dollar
Multiplied by: Number of US Dollars
Foreign Currency Exchange Gain/Loss per US Dollar

Problem G
1.) Balance Sheet Date: December 31, 2013
Date of transaction: November 1, 2013
Foreign Currency Exchange Gain per Euro
Multiplied by: Number of Euros
Foreign Currency Exchange Gain/Loss per Euro

2.) Date of transaction: November 1, 2013

Balance Sheet Date: December 31, 2013
Foreign Currency Exchange Gain per Euro
Multiplied by: Number of Euros
Foreign Currency Exchange Gain/Loss per Euro

Problem H
IV
Balance Sheet Date:
10/1/2013
12/31/2013
Foreign Currency Exchange Gain per baht
 Multiplied by: Number of baht
Foreign Currency Exchange Gain/Loss per baht

Settlement Date:
10/1/2013
1/30/2014
Foreign Currency Exchange Gain per baht
Multiplied by: Number of baht
Foreign Currency Exchange Gain/Loss per baht

1.) TD B/S D SD
FV ₱15,700.00 ₱28,200.00 ₱30,780.00
IV ₱0.00 (₱26,220.00) (₱30,780.00)
TV ₱15,700.00 ₱1,980.00 ₱0.00

2.) BS/ Date ₱26,220.00

SD ₱30,780.00
₱4,560.00 GAIN

3.) Hedge Item: A/P

10/1/2013
12/31/2013
Foreign Currency Exchange Gain per baht
Multiplied by: Number of baht
Foreign Currency Exchange Gain/Loss per baht

Hedge Instrument: Call Option (P15,700- 28,200)

4.) BS/ Date ₱28,200.00

SD ₱30,780.00
₱2,580.00 GAIN

Problem I
IV
Balance Sheet Date:
12/1/2013
12/31/2013
Quest Company Gain/Loss per share
Multiplied by: Number of shares
Quest Company Gain per share

Settlement Date:
 12/1/2013
4/1/2014
Quest Company Gain/Loss per share
Multiplied by: Number of shares
Quest Company Gain per share

1.) TD B/S D SD
FV ₱11,900.00 ₱15,400.00 ₱20,700.00
IV ₱0.00 ₱6,900.00 ₱20,700.00
TV ₱11,900.00 ₱8,500.00 ₱0.00

2.) BS/ Date ₱6,900.00

SD ₱20,700.00
₱13,800.00 GAIN

3.) Hedge Item: A/P

12/31/2013
4/1/2013
Quest Company Gain/Loss per share
Multiplied by: Number of shares
Quest Company Gain per share

Hedge Instrument: Put Option (P15,400- 20,700)

4.) TD ₱11,900.00
B/S Date ₱15,400.00
₱3,500.00 GAIN

Problem J
IV
31-Aug (7.95 - 7.952) x 2,340,000
30-Sep (7.95 - 7.963) x 2,340,000
2-Nov (7.95 - 7.97) x 2,340,000

1.) 1-Aug 31-Aug 30-Sep 20-Nov

FV ₱ 8,850.00 ₱ 15,690.00 ₱ 34,410.00 ₱ 46,800.00
IV ₱ - ₱ -4,680.00 ₱ -30,420.00 ₱ -46,800.00
TV ₱ 8,850.00 ₱ 11,010.00 ₱ 3,990.00 ₱ -

2.) 1-Aug ₱ -
 30-Sep ₱ 30,420.00
₱ 30,420.00 GAIN @ increase in OCI

3.) 30-Sep ₱ 3,990.00

2-Nov ₱ -
₱ 3,990.00 LOSS @ decrease in P/L

4.) Sold- December 7 ₱ 29,400,000.00

Beginning Inventory (17.97 x 2,376,000) ₱ -18,936,720.00
Processing Cost ₱ -240,000.00
IV- Gain (November 2) ₱ 46,800.00
Total- IV Hedging- OCI ₱ 10,270,080.00
Total- IV Hedging- P/L ₱ -8,850.00
Net Income ₱ 10,261,230.00

Problem K
Net Assets @ Closing (A-L) : 570,000 x 42.50 ₱ 24,225,000.00
v e r s u s

Beginning Inventory ₱ -
Investment : 345,000 x 45 ₱ 15,525,000.00
Net Income : 270,000 x 43.75 ₱ 11,812,500.00
Dividends : 45,000 x 40 (₱1,800,000.00) ₱ 25,537,500.00
FOREX Loss (₱1,312,500.00)

Net Assets @ Closing (A-L) : 637,000 x 47.50 ₱ 30,281,250.00

v e r s u s

Beginning Inv. : 570,000 x 42.50 ₱ 24,225,000.00

Investment : 67,500 x 45 ₱ 3,037,500.00
Net Income ₱ -
Dividends ₱ - ₱ 27,262,500.00
FOREX Gain ₱3,018,750.00

Adjusted Cumulative Translation ₱1,706,250.00

 ₱76.15
₱72.35
₱3.80
31,800
₱120,840.00 GAIN

₱64.10
₱62.40
₱1.70
50,320
₱85,544.00 LOSS

₱56.15
₱54.25
₱1.90
45,400
₱86,260.00 GAIN

SPOT RATE
₱74.85 Dec. 31
₱75.75 Jan. 30
(₱0.90) (₱98,658.00) LOSS

₱81.90
₱80.70
₱1.20
111,200
₱133,440.00 GAIN

₱80.40
₱80.10
₱0.30
111,200
₱33,360.00 GAIN
 ₱80.10
₱80.40
(₱0.30)
111,200
(₱33,360.00) LOSS

₱42.30
₱43.70
(₱1.40)
169,200
(₱236,880.00) LOSS

₱42.80
₱42.50
₱0.30
169,200
₱50,760.00 GAIN

₱42.20
₱42.80
(₱0.60)
169,200
(₱101,520.00) LOSS

₱96.50
₱94.30
₱2.20
37,800
₱83,160.00 GAIN

₱94.30
₱96.50
(₱2.20)
37,800
(₱83,160.00) LOSS

₱12.40
₱12.423
(₱0.023)
 1,140,000
(₱26,220.00)

₱12.40
₱12.427
(₱0.027)
1,140,000
(₱30,780.00)

Decrease in FV Hedge
in Profit/Loss
₱13,720.00 LOSS

₱12.40
₱12.423
(₱0.023)
1,140,000
(₱26,220.00)

₱12,500.00
(₱38,720.00) LOSS

₱28.00
₱26.50
₱1.50
4,600
₱6,900.00
 ₱28.00
₱23.500
₱4.500
4,600
₱20,700.00

Increase in FV Hedge
in Profit/Loss
₱3,400.00 loss of seller

₱26.50
₱23.50
₱3.00
4,600
₱13,800.00

₱5,300.00 anser
₱8,500.00

(₱4,680.00)
(₱30,420.00)
(₱46,800.00)

Increase in FV Hedge
in Profit/Loss
₱2,160.00 GAIN