If a company has a payable denominated in the Euro, and the U. S. dollar weakens, then what will happen?

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Tapia

Business

22 December, 05:53

If a company has a payable denominated in the Euro, and the U. S. dollar weakens, then what will happen?

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Tobias Schwartz · Answer 1

Answer and explanation:

If a company has a payable in a foreign currency and the local currency weakens, the initial amount of the payable will be higher in the local currency of the firm which will represent a company loss. The loss must be recorded in the financial statements the very same date where the loss takes place regardless the payable will be paid on the same day.