Reference no: EM132969994

Kennetha Corporation had the following foreign currency transactions during 20x4:

• Merchandise was purchased from a foreign supplier on January 20, 20x4 for the Philippine peso equivalent of P90,000. The invoice was paid on March 20, 20x4, at the Philippine peso equivalent of P96,000.
• On July 1, 20x4, Kennetha borrowed from foreign corporation with a Philippine peso equivalent of P500,000 evidenced by a note that was payable in the lender's local currency on July 1, 20x5. On December 31, 20x4, the Philippines peso equivalents of the principal amount and accrued interest were P520,000 and P26,000, respectively. Interest on the note is 10% per annum.

Problem 1: In Kennetha's 20x4 income statement, what amount should be included as foreign exchange loss