Answer to Question #246877 in Macroeconomics for John

Question

An Italian exporter exported sports apparel worth €300,000 to the UK, where the exchange rate is 0.85£/€ and billed @ 255000£ to be received after 6 months. Due to exchange fluctuations, the Italian trader received ( though received 2,55000£) in Euros only 270,000€, thus incurring a loss *

Answer 1

Billed amount = €300,000

Amount received = €270,000

As per formula

 Exchange loss = Billed amount - Actual receipt

                                    = 300,000-270,000

                                    = € 30,000

 There will be Forex exchange loss of €30,000 in the Italian income statement