a U.S. exporter (Amerco) sells goods to a German importer that will pay in euros ().

Assume that, as is customary in its industry, Amerco does not require immediate payment and allows its German customer 30 days to pay for its purchases. assume that Amerco, a U.S. company, sells goods to a German customer at the price of 1 million euros when the spot exchange rate is $1.32 per euro. If payment were received at the sale date, Amerco could have converted 1 million euros into $1,320,000; this amount clearly would be the amount at which the sales revenue would be recognized. Instead, Amerco allows the German customer 30 days to pay for its purchase. At the end of 30 days, the euro has depreciated to $1.30 and Amerco is able to convert the 1 million euros received on that date into only $1,300,000. How should Amerco account for this $20,000 decrease in value? on December 1, 2011, the three-month forward rate for euros is $1.305 and Amerco signs a contract with New Manhattan Bank to deliver 1 million euros in three months in exchange for $1,305,000.