Question

Teton, Inc., reported a net gain of $41,400 on its foreign assets due to the weakening of the U.S. dollar in 2017. In the same year, the company disclosed gains of $958,800 on its derivatives and hedges and a $112,800 unrealized gain on its trading securities. The company also reported a $556,200 loss on the sale of some equipment. Which of the following best describes the impact of these transactions on Teton, Inc.'s accounts? A. $1,113,000 increase to net income B. $1,000,200 increase to accumulated other comprehensive income C. $1,000,200 increase to net income D. $ 154,200 increase to accumulated other comprehensive income E. None of the above

Answer 1

The impact of the transactions on Teton, Inc.'s accounts is a $556,800 increase in net income.

Step-by-step explanation:

The impact of the transactions on Teton, Inc.'s accounts can be summarized as follows:

1. The net gain of $41,400 on foreign assets due to the weakening of the U.S. dollar would increase the net income of the company by $41,400.
2. The gains of $958,800 on derivatives and hedges would increase the net income of the company by $958,800.
3. The unrealized gain of $112,800 on trading securities would also increase the net income of the company by $112,800.
4. The loss of $556,200 on the sale of equipment would decrease the net income of the company by $556,200.

To calculate the overall impact on net income, we add up the gains and subtract the losses:

Total gain = $41,400 + $958,800 + $112,800 = $1,113,000

Total loss = -$556,200

The net impact on net income is $1,113,000 - $556,200 = $556,800 increase in net income.

Therefore, the correct answer is Option A. $1,113,000 increase to net income.

Answer 2

Option D is correct one.

$ 154,200 increase to accumulated other comprehensive income

Step-by-step explanation:

Foreign currency gain = $41,400

Un-realised gain on its trading securities= $112,800

Increase in Accumulated other comprehensive income= $ 154,200