2. ABC Inc. borrowed funds from its bank. Details are asfollows.
Four year term loan, U.S. $500,000
Funds borrowed 1 January 20X6; due 31 December 20X9
Exchange rates:
1 January 20X6 | U.S. $1 = Cdn. $1.35 |
31 December 20X6 | U.S. $1 = Cdn. $1.40 |
31 December 20X7 | U.S. $1 = Cdn. $1.42 |
31 December 20X8 | U.S. $1 = Cdn. $.136 |
31 December 20X9 | U.S. $1 = Cdn. $1.39 |
Required:
Prepare the journal entries as follows to record:
A) Receipt of loan proceeds for January 20X6.
B) The adjustment to spot rate for December 20X6.
C) The adjustment to spot rate December 20X7
D) The adjustment to spot rate December 20X8
E) The adjustment to spot rate December 20X9
F) Repayment of loan December 20X9
G) Based on the above information calculate the total accountingrecognition of loss.
