Translation of purchase of plant, sale of inventories and interest free loan LO3, 6, 7
Question:
Translation of purchase of plant, sale of inventories and interest free loan LO3, 6, 7 Just Ltd is an Australian company. The functional currency of Just Ltd is A$. It has reporting periods ending on 31 December and 30 June. During the year ended 30 June 2020, Just Ltd entered into various foreign currency transactions in euros (€) as follows.
(a) On 15 November 2019, Just Ltd ordered plant costing €800 000 from an Italian company under an FOB destination contract. On 30 November 2019, the plant was delivered. On 25 January 2020, the invoice for the plant purchase was paid.
(b) On 30 November 2019, Just Ltd sold inventories to a German customer for the agreed price of €500 000. The inventories had a cost of $350 000. On 31 January 2020, the sales invoice was paid by the customer.
(c) On 1 July 2019, Just Ltd made an interest-free loan to a related French company, Attitude Cavaliere, for €1 000 000. The term of the loan is set at 5 years, at which time Attitude Cavaliere will be required to arrange its debt finances independently. Applicable exchange rates are as follows. 1 July 2019 €1 = A$1.22 15 Nov. 2019 €1 = A$1.15 30 Nov. 2019 €1 = A$1.25 31 Dec. 2019 €1 = A$1.20 25 Jan. 2020 €1 = A$1.18 31 Jan. 2020 €1 = A$1.16 30 June 2020 €1 = A$1.30 Required In accordance with AASB 121/IAS 21, prepare the entries of Just Ltd for the half year to 31 December 2019 and the full year to 30 June 2019.
Step by Step Answer:
Financial Reporting
ISBN: 978-0730363361
2nd Edition
Authors: Janice Loftus ,Ken Leo ,Sorin Daniliuc ,Belinda Luke ,Hong Nee Ang ,Karyn Byrnes