Question
On 15 May 2017, Chan Pte Ltd, whose functional currency is SGD, purchased a piece of land for owner-occupation for USD 2.7 million on cash
On 15 May 2017, Chan Pte Ltd, whose functional currency is SGD, purchased a piece of land for owner-occupation for USD 2.7 million on cash basis. On financial year end 31 December 2017, this land was revalued, for the first time, to USD 3.2 million. Relevant exchange rates were as follows:
15 May 2017 : USD 1 = SGD 1.30
31 December 2017 : USD 1 = SGD 1.20
(a) Show how the transactions should be recorded on 15 May and 31 December 2017. Narrations are not required. State each journal date clearly.
(b) In revaluing a property, plant & equipment purchased in foreign currency, the exchange gain or loss, though recognized, is never visible in the revaluation journal entry. Briefly explain why this is so.
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