You are the finance director of the Australian listed company, Yidaki Ltd that has A$ as the functional currency. Yidaki Ltd purchases goods from Hong Kong and has borrowings from a US bank. The company’s financial year ends on 30 June2023. . Yidaki Ltd entered the following transactions during the year.

(a) Yidaki Ltd purchased inventories from a Hong Kong supplier for HK\($2\) 700 000 on 15 April 2023. The purchase contract is settled in three equal instalments of HK\($900\) 000.
The following exchange rates apply.

(b) On 1 January 2023, Yidaki Ltd borrowed US\($3\) 000 000 from an investment bank in the United States for a 12-month period. The borrowing has a fixed rate of interest at 10% p.a. payable at 6-month intervals. On 1 April 2023, Yidaki Ltd entered a 9-month forward contract to buy US\($2\) 500 000 in order to hedge against the foreign exchange risk on the US$ loan principal. The following exchange rates apply.

Assume a 0% discount rate for fair value calculations.

Required 

Prepare the entries of Yidaki Ltd to account for its foreign currency transactions in accordance with AASB 121/IAS 21.

Transcribed Image Text:

15 Apr. 2023 31 May 2023 1st payment of HK$900 000 Date of purchase HK$2 700 000 A$1=HK$5.99 A$1=HK$6.01 30 Jun. 2023 End of the reporting period A$1=HK$6.21 31 Aug. 2023 2nd payment of HK$900 000 A$1=HK$6.18 30 Sept. 2023 3rd payment of HK$900 000 A$1=HK$6.24