Asked by Brittney Hayes on Jun 27, 2024
Verified
A U.S.company makes a sale to a foreign customer receivable in 30 days in the customer's currency.The sale would be recorded by the U.S.company on the date:
A) Of sale using a projected estimate of the U.S.dollar value at payment date.
B) Of sale using a 30-day average U.S.dollar value.
C) Of sale using the current dollar value.
D) Of sale using the foreign currency value.
E) When payment is received.
Foreign Exchange Rate
The price at which one currency can be exchanged for another currency.
International Customer
A customer based in a country different from the one where the seller or service provider is located, often involving cross-border transactions.
Credit Sale
A transaction where goods or services are provided to a customer with the agreement that payment will be made at a later date.
- Learn how foreign exchange rates at the time of transaction and settlement affect the recording of international sales and the recognition of foreign exchange gains or losses.
Verified Answer
BB
Bhanu BhardwajJul 02, 2024
Final Answer :
C
Explanation :
The correct answer is C) Of sale using the current dollar value. According to U.S. GAAP (Generally Accepted Accounting Principles), transactions denominated in a foreign currency should be recorded by translating the foreign currency amount into the functional currency (in this case, U.S. dollars) using the exchange rate in effect on the date of the transaction. This means that the sale would be recorded on the date of the sale using the current exchange rate to determine the U.S. dollar value.
Learning Objectives
- Learn how foreign exchange rates at the time of transaction and settlement affect the recording of international sales and the recognition of foreign exchange gains or losses.