Question: Exchange rates that vary over time create a reporting problem for companies working in international
markets. To illustrate, assume a U.S. company makes a sale of a service to a Mexican company on December 9,
Year One, for 100,000 Mexican pesos that will be paid at a later date. The exchange rate when the sale was made
is assumed to be 1 peso equal to $0.08. However, by the end of Year One when financial statements are produced,
the exchange rate has changed to 1 peso being equal to $0.09. What reporting does a U.S. company make of
transactions that are denominated in a foreign currency if the exchange rate changes as time passes?1
Answer: At the time of the sale, reporting is easy. The 100,000 pesos has the equivalent value of $8,000 (100,000
pesos × $0.08) so that the following journal entry can be produced. Even though 100,000 pesos will be physically
received, $8,000 is reported so that all balances on the seller’s financial statements are stated in terms of U.S. dollars.
By the end of the year, the exchange rate is 1 peso equal to $0.09. The Mexican peso is worth a penny more
relative to the U.S. dollar. Thus, 100,000 pesos can now be changed into $9,000 (100,000 × $0.09). When
adjusting entries are prepared in connection with the production of financial statements, one or both of the above
account balances could remain at $8,000 or be updated to $9,000. The sale took place when the exchange rate was
$0.08 but, now, before the money is collected, the peso has risen in value to $0.09. FASB had to set a standard
rule as to whether the current rate or the historical rate was appropriate for reporting foreign currency balances.
Why Work with Us
Top Quality and Well-Researched Papers
Our writers are encouraged to read and research widely to have rich information before writing clients’ papers. Therefore, be it high school or PhD level paper, it will always be a well-researched work handled by experts.
Professional and Experienced Academic Writers
For one to become part of our team, thorough interview and vetting is undertaken to make sure their academic level and experience are beyond reproach, hence enabling us give our clients top quality work.
Free Unlimited Revisions
Once you have received your paper and feel that some issues have been missed, just request for revision and it will be done. In addition, you can present your work to the tutor and he/she asks for improvement/changes, we are always ready to assist.
Prompt Delivery and 100% Money-Back-Guarantee
All our papers are sent to the clients before the deadline to allow them time to review the work before presenting to the tutor. If for some reason we feel our writers cannot meet the deadline, we will contact you to ask for more time. If this is not possible, then the paid amount will be refunded.
Original & Confidential
Our writers have been trained to ensure work produced is free of plagiarism. Software to check originality are also applied. Our clients’ information is highly guarded from third parties to ensure confidentiality is maintained.
24/7 Customer Support
Our support team is available 24 hours, 7 days a week. You can reach the team via live chat, email or phone call. You can always get in touch whenever you need any assistance.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
You have had a hectic day, and still need to complete your assignment, yet it is late at night. No need to panic. Place your order with us, retire to bed, and once you wake up, the paper will be ready.
It does not matter the urgency of your paper, or the academic level, our team is ready to help you 24/7. Just contact us and all your academic needs will be sorted.
Admission Essays & Business Writing Help
A student is often required to write an admission letter requesting to be admitted in a certain institution. For you to be gain that admission in your dream institution, you must write a convincing letter. You can depend on our team for the best admission letters.
Academic writing is not just about getting information and throwing it all over. Our team will ensure you have a polished paper that is coherent and has a good flow of information. We also ensure the paper follows the correct formatting styles like APA, Harvard, MLA, Chicago/Turabian.
If our writers write a paper but you are not satisfied in one way or another, you can always ask for revision. This is totally free. Our writers and editors will revise your paper untill you are be totally satisfied. We as well offer revision for papers not done by our writers at a small fee.