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Foreign Currency Transactions and Hedging Foreign Exchange Risk 433




Question;Foreign Currency Transactions and Hedging Foreign Exchange Risk 433 EXCEL CASE?DETERMINE FOREIGN EXCHANGE GAINS AND LOSSESImport/Export Company, a U.S. company, made a number of import purchases and export sales denom- inated in foreign currency in 2008. Information related to these transactions is summarized in the fol- lowing table. The company made each purchase or sale on the date in the Transaction Date column and made payment in foreign currency or received payment on the date in the Settlement Date column.Foreign CurrencyBrazilian real (BRL) Swiss franc (CHF) Swiss franc (CHF) EuroEuroSouth African rand (ZAR) Chinese yuan (CNY) South Korean won (KRW)Type of TransactionImport purchase Export sale Import purchase Export sale Export sale Export sale Import purchase Import purchaseRequiredAmount in Foreign Currency(89,000) 56,700 (50,600) 32,250 32,250402,000 (360,000) (47,300,000)Transaction Date1/1/2008 1/1/2008 4/1/2008 4/1/2008 4/1/2008 4/1/2008 2/1/2008 2/1/2008Settlement Date5/1/20084/1/2008 10/1/2008 7/1/2008 9/1/2008 8/1/2008 8/1/2008 8/1/20081. Create an electronic spreadsheet with the information from the preceding table. Label columns as follows:Foreign CurrencyType of TransactionAmount in Foreign Currency Transaction DateExchange Rate at Transaction Date $ Value at Transaction Date Settlement DateExchange Rate at Settlement Date $ Value at Settlement DateForeign Exchange Gain (Loss)2. Use historical exchange rate information available on the Internet at, Historic Lookup, to find the 2008 exchange rates between the U.S. dollar and each foreign currency on the relevant transaction and settlement dates.3. Complete the electronic spreadsheet to determine the foreign exchange gain (loss) on each transac- tion. Determine the total net foreign exchange gain (loss) reported in Import/Export Company?s 2008 income statement.


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