The year-end of Stunt Limited (“Stunt”) is 31 December.

(a) On 1 December 2017, Stunt purchased raw materials from Denver Limited, its US supplier, for $84,000 with payment due on 31 January 2018. The prevailing exchange rates were as follows:

1 December 2017 €1 = $1.58 31 December 2017 €1 = $1.56 31 January 2018 €1 = $1.60 2017 average rate €1 = $1.59 Requirement

(1) Show the value at which the invoice should be recorded in trade payables and inventory on 1 December 2017.

(11) Show the value at which the invoice should be recorded in trade payables and inventory on the 31 December 2017.

(iii) Show the settlement value of the invoice.

(iv) Show the accounting treatment for any exchange gain or loss arising.

(b) On 1 December 2017, Stunt sold finished goods to a Swiss company for €600,000 when the exchange rate ruling was €1 = Sf10.8. No cash was received from the Swiss company until 31 January 2018 when the exchange rate was €1 = Sf12.8. The exchange rate at 31 December 2017 was €1 = Sf9.6.

Requirement How would the transaction be recorded at 1 December 2017, 31 December 2017 and 31 January 2018?

(c) Draft a suitable foreign currencies accounting policy note for Stunt Limited.