A finished ACC-660 Topic 2 exchange gain placement analysis example, remeasuring a euro receivable and an intra-entity euro loan and placing the loan's gain only after weighing settlement evidence. Searches like "acc 660 topic 2 assignment example", "acc660 topic 2 sample" and "acc-660 topic 2 example" land here.
What a finished ACC-660 Topic 2 exchange gain placement analysis looks like
The finished analysis measures each balance at three dates, all figures illustrative. A sale invoiced at 600,000 euros when the rate was $1.08 is recorded at $648,000, and the sale stays at that figure whatever the currency does next. At year end the rate is $1.14, so the receivable is remeasured to $684,000 and a $36,000 gain goes to net income; settlement in February at $1.12 produces a $12,000 loss the following year. The parent's 4,000,000-euro loan to its subsidiary, made at $1.08, shows a $240,000 gain at the same year-end rate. Whether that gain reaches income or other comprehensive income turns on whether settlement is planned or anticipated in the foreseeable future, and the analysis weighs the loan agreement, treasury's rollover history and recent board minutes before placing it.
How an ACC-660 Topic 2 example is structured
Two balances, three dates and one judgment shape the analysis. It opens with the functional currency of each entity, since a balance creates a transaction gain only for an entity whose functional currency differs from the currency the balance is denominated in. The receivable comes second, traced from the sale date through year end to settlement, with the two-transaction perspective stated so that the sale is never restated. The loan follows with the same arithmetic and a note that the intra-entity balance eliminates in consolidation while its exchange gain does not. A fourth part sets out the evidence on settlement: a five-year term, three past rollovers and minutes recording a plan to repay the loan from a warehouse sale within two years. The fifth part places the gain in net income and explains why the minutes outweigh the rollover history. The last part shows consolidated income under the rejected placement.
Functional currency fixed for each entity
The parent reports in dollars and the subsidiary operates in euros, so only the parent's books carry a transaction gain on either of the two euro balances.
The sale recorded once and left alone
The two-transaction perspective keeps revenue at $648,000, and every later rate movement is reported as an exchange gain or loss, never as a change in the sale.
An eliminated balance, a surviving gain
Consolidation removes the loan and the subsidiary's payable together, but the parent's $240,000 gain reflects a real change in dollar value and stays in the consolidated figures.
Settlement evidence weighed item by item
The five-year term, three prior rollovers and minutes planning repayment from a warehouse sale are each assessed for what they show about settlement in the foreseeable future.
The rejected placement priced
Treating the loan as long-term investment in nature would move the $240,000 into other comprehensive income and cut reported net income from $276,000 to $36,000.
Where marks go in ACC-660 Topic 2
Errors on this topic tend to start at the sale date. Restating revenue when the receivable is remeasured applies a one-transaction view US GAAP rejects, and it is usually the first thing a grader checks. Reporting the loan's gain in other comprehensive income because the borrower is a subsidiary treats intra-entity status as if it alone decided placement. The reverse error, sending the gain to income without examining settlement intent, skips the only judgment the facts contain. Papers that eliminate the gain along with the loan on consolidation remove an economic effect the group actually bore. Evidence cited selectively, the rollovers without the minutes or the minutes without the rollovers, produces a placement that a reviewer can overturn by reading the file. Leaving out the February loss hides the second period entirely.
Get an ACC-660 Topic 2 example written to your instructions
Send your ACC-660 Topic 2 instructions, the rubric and the currency facts or balances your section supplied. A custom example is written to them, with each balance measured at every relevant date, each entity's functional currency stated, settlement evidence weighed and the gain placed and defended against the other placement, returned in 24 to 48 hours. Your first one is free.
ACC-660 Topic 2 questions, answered
What is the two-transaction perspective?
It treats a foreign currency sale or purchase and its later settlement as two separate events. The sale is measured at the spot rate on the transaction date and never revised. Any change in the dollar value of the receivable between that date and settlement is an exchange gain or loss, reported in the period it arises. US GAAP requires this view; recording the movement as an adjustment to revenue is not permitted.
When does an intra-entity loan's exchange gain bypass net income?
When the balance is of a long-term investment nature, meaning settlement is not planned or anticipated in the foreseeable future, and the entities are consolidated, combined or accounted for by the equity method. It is then reported in other comprehensive income alongside translation adjustments. The judgment rests on evidence of intent and ability to leave the balance outstanding, so the example weighs documents rather than the loan's label.
Why does the gain survive when the loan is eliminated?
Because the elimination cancels a receivable and payable the group owes itself, while the gain records something that happened outside the group: the euro rose against the dollar, and the parent's claim is now worth more in its own currency. ASC 830 keeps such gains in consolidated net income unless the balance is of a long-term investment nature. The elimination entry has no reason to cancel an exchange effect.