Question
Stranded Ltd is an Australian company that purchases inventories from Hammers plc, which is an English company. The following information is relevant to a recent
Stranded Ltd is an Australian company that purchases inventories from Hammers plc, which is an English company. The following information is relevant to a recent acquisition of inventories for 300 000 pursuant to a contract with terms including FOB shipping.
Date | Event | Exchange rate |
11 May 2017 | Inventories shipped | A$1 = 0.41 |
22 June 2017 | Inventories delivered | A$1 = 0.42 |
30 June 2017 | End of reporting period | A$1 = 0.43 |
31 July 2017 | Cash payment of 300 000 to Hammers plc | A$1 = 0.39 |
Required:
In accordance with AASB 121/IAS 21, prepare all of the journal entries of Stranded Ltd that relate to the foreign currency purchase of inventories including all calculations and explanations where necessary e.g. why choose a certain date to process a transaction, what year end disclosures apply, what final profit or loss applies on the deal.
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