Question
On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an
On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland on that date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd's reporting date. The exchange rates at the relevant dates are: 1 March 2011 A$1.00 = NZ$1.20 1 June 2011 A$1.00 = NZ$1.30 30 June 2011 A$1.00 = NZ$1.25 Required: a) Determine the amount in AUD, as at: 1 March 2020; and 30 June 2020. (2 marks) b) Prepare the journal entries for the above dates showing the amount of exchange gain or loss .
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