On 1 March 2021 Drouyn Ltd enters into a binding agreement with a New Zealand company, which
Question:
On 1 March 2021 Drouyn Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand company to construct an item of machinery for Drouyn Ltd. The cost of the machinery is NZ$750 000. The machinery is completed on 1 June 2022 and shipped FOB Auckland on that date. The debt is unpaid at 30 June 2022, which is also Drouyn Ltd’s reporting date.
The exchange rates at the relevant dates are:
1 March 2021 A$1.00 = NZ$1.20
30 June 2021 A$1.00 = NZ$1.15
1 June 2022 A$1.00 = NZ$1.30
30 June 2022 A$1.00 = NZ$1.25
REQUIRED
Provide the required journal entries of Drouyn Ltd for the years ending 30 June 2021 and 30 June 2022.
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Step by Step Answer:
Being under construction the item would appear to be a qualifying asset under AASB 123 for the perio...View the full answer
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