2. ABC Inc. borrowed funds from its bank. Details are as follows. Four year term loan, U.S....

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Accounting

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.

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4.4 Ratings (747 Votes)

A Cash ac Dr 675000 Term Loan Ac Cr 675000 Being receipt of loan proceeds USD 500000135 CAD 675000 BCurrency GainLoss Unrealized Ac Dr 25000 Term Loan Ac Cr 25000 140135500000 25000 This is recognised as unrealized forex loss upon See Answer

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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