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17. On November 1, 2016, American Company sold inventory to a foreign customer. The account will be settled on March 1 with the receipt of $500,000 foreign currency units (FCU). On November 1, American also entered into a forward contract to hedge the exposed asset. The forward rate is $0.70 per unit of foreign currency. American has a December 31 fiscal year-end. Spot rates on relevant dates were: Per Unit of Date November 1 December 31 March 1 0.73 0.71 0.74 The entry to record the forward contract is A) FCU Receivable 350,000 15,000 Premium on Forward Contract Dollars Payable 365,000 B) Dollars Receivable 365,000 Discount on Forward Contract FCU Payable 15,000 350,000 C) Dollars ReceivableFCU Receivable Discount on Forward Contract 350,000 15,000 365,000 365,000 15,000 350,000 FCU Payable D) FCU Receivable Discount on Forward Contract Dollars Payable 18. Craiger, Inc. a U.S. corporation, bought machine parts from Reinsch Company of Germany on December 1, 2011, for 70,000 marks, when the spot rate for marks was S0.5395. Craigers year-end was December 31,2011, when the spot rate for marks was S0.5445. Craiger bought 70,000 marks and paid the invoice on April 20, 2012, when the spot rate was $O.5495. How much should be shown in Craiger's income statements as foreign exchange (transaction) gain or loss for the years ended December31, 2011 and 2012? 2011 a. SO b. SO c. $350 loss d. $350 loss 2012 SO S350 loss SO $350 loss Version 3 Page 5

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