Question
Can someone help me to solvequestions, Thank you. 1/ On 1 March 2017 Cron Ltd entered a transaction with the American Eagles Inc (a United
Can someone help me to solvequestions, Thank you.
1/ On 1 March 2017 Cron Ltd entered a transaction with the American Eagles Inc (a United States firm) for the sale USD500,000 of scrummaging machines. The equipment is to be air freighted on 2 May 2017 and payment is due on 1 August 2017.
Cron Ltd is concerned about exchange rate fluctuations and on 1 March purchases an option to sell USD500,000 at an exchange rate 0.7500 for delivery on 1 August 2017. Cron Ltd pays $15,500 for the option at this time. On 2 May 2017 the option is worth $1,500 and on 30 June 2017 the value of the option is $20,500.
The exchange rates over this period are:
1 March 2017
AUD1.00 = USD0.7600
2 May 2017
AUD1.00 = USD0.7400
30 June 2017
AUD1.00 = USD0.7700
1 August 2017
AUD1.00 = USD0.8000
How to prepare journal entries for Cron Ltd that are required byAASB 121 Foreign Currenciesand AASB 132 / 139Financial Instrumentsto record the above transactions, including the adjustments at year end (30 June 2017). Cron Ltd does not designate the option as a hedge.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started