Question 19: Foreign Currency Transactions

Pacific Green is a Fijian company with a functional currency of FJD$. The company has entered into numerous transactions denominated in NZD$ during the year ended 30 June 2020. If the closing exchange rate is FJD$1.00 = NZD$0.77, then determine the translated amount that will be included in the financial statements for each of the following balances, providing the necessary journal entries.

I.A piece of Land at cost of NZD$400,000 acquired on 1 February 2020 when the exchange rate is FJD$1.00 = NZD$0.67.

II.The piece of Land in I above was revalued to NZD$600,000 on 30 June 2020.

III.A credit sale of NZD$80,000 on 12 March 2020 when the exchange rate is FJD$1.00 = NZD$0.69. Received cash from debtor of NZD$40,000 on 30 June 2020.

IV.A Credit purchase of inventories worth NZD$250,000 on 15 June 2020 when the exchange rate is FJD$1.00 = NZD$0.62. The creditor remains unpaid at 30 June 2020.

V.A loan payable of NZD$800,000 arranged on 1 January 2020 when the exchange rate is FJD$1.00 = NZD$0.60. On 30 June 2020, the outstanding interest on the loan is NZD$20,000.

VI.A 6-month forward contract to buy NZD$3,000,000 entered into on 1 April 2020 at the forward rate of FJD$1.00 = NZD$0.72. On 30 June 2020, the forward rate for a 3-month forward contract to buy NZD$3,000,000 is FJD$1.00 = NZD$0.70.