Foreign Currency Transaction Recognition

Easy Multinational Operations Foreign Currency Transactions

ABC Corporation, a U.S.-based company, conducted a transaction with a supplier in France. The transaction amount was €100,000, and at the time of the transaction, the exchange rate was 1.2 USD/EUR. By the end of the accounting period, the exchange rate changed to 1.3 USD/EUR. How should ABC Corporation recognize the foreign currency transaction in its financial statements?

Record the transaction at the initial exchange rate of 1.2 USD/EUR.

Record the transaction at the year-end exchange rate of 1.3 USD/EUR.

Record the transaction at the average exchange rate for the period.

Hint

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