Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 320 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 512,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows: Date U.S. Dollar per Brazilian Real (BRL) September 1, 2020 $ 0.220 December 1, 2020 0.210 December 31, 2020 0.230 March 1, 2021 0.215 Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020? Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021? Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and in 2021? (Input all amounts as positive values.)
Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 320 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 512,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows: Date U.S. Dollar per Brazilian Real (BRL) September 1, 2020 $ 0.220 December 1, 2020 0.210 December 31, 2020 0.230 March 1, 2021 0.215 Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020? Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021? Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and in 2021? (Input all amounts as positive values.)
Chapter22: International Financial Management
Section: Chapter Questions
Problem 4QTD
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Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 320 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 512,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows:
| Date | U.S. Dollar per Brazilian Real (BRL) |
||
| September 1, 2020 | $ | 0.220 | |
| December 1, 2020 | 0.210 | ||
| December 31, 2020 | 0.230 | ||
| March 1, 2021 | 0.215 | ||
- Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020?
- Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021?
- Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and in 2021?
(Input all amounts as positive values.)
Transcribed Image Text:Effect of Exchange Rate Fluctuations
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