A year ago, MC Hammer Company had inventory in Britain valued at 240,000 pounds. The exchange rate for dollars to pounds was 1£

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A year ago, MC Hammer Company had inventory in Britain valued at 240,000 pounds. The exchange rate for dollars to pounds was 1£

= 2 U.S. dollars. This year the exchange rate is 1£ = 1.82 U.S. dollars. The inventory in Britain is still valued at 240,000 pounds. What is the gain or loss in inventory value in U.S. dollars as a result of the change in exchange rates? (Hint: Gain/loss is the difference between total value of last period and current period

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1 answer:

Mariulka [3.8K] · Answer 1 · 2026-03-17T18:41:05+03:00

Gain = 132,000 - 120,000 = 12,000 dollars. Details: A year prior, MC Hammer Company’s inventory in Britain was valued at 240,000 pounds. The exchange rate converted 1£ to 2 U.S. dollars. Currently, the exchange rate is 1£ to 1.82 U.S. dollars, and the inventory remains at 240,000 pounds. In Year 1, an exchange rate of 1/2 resulted in an inventory value of 240,000 * 0.5 = 120,000 dollars. In Year 2, the exchange rate of 1/1.82 provided a value of 120,000 * 0.55 = 132,000 dollars.