Subject: Advanced corporate reporting

Topic: MFRS 121 Foreign Currency

A company prepares financial statements to 31 December each year and has the pound sterling as its functional currency. On 29 October 2020, the company buys inventory for $28,380. This amount is still unpaid at 31 December 2020. The inventory is all sold during the month of December. Exchange rates are 1 = $1.65 on 29 October 2020 and 1 = $1.72 on 31 December 2020.

Calculate:

(a) the amount in at which the purchase and the trade payable should be recorded on 29 October 2020.

(b) the amount in at which the trade payable should be shown in the statement of financial position at 31 December 2020

(c) the exchange difference which arises