Question
XYZ Corp, has carried out transactions denominated in foreign currency during the financial year ended 31 October 2019 and has conducted foreign operations through a
XYZ Corp, has carried out transactions denominated in foreign currency during the financial year ended 31 October 2019 and has conducted foreign operations through a foreign entity. Its functional and presentation currency is the US dollar. XYZ purchased inventory from a foreign supplier for Euros 8 million on 31 July 2019, the trade payable was still outstanding and the inventory were still held by XYZ Corp. XYZ Corp sold its products to a foreign customer for Euros 4 million on 31 July 2019 and received payment for the products in euros on 31 October 2019. Additionally, XYZ Corp purchase investment property on 1 November 2018 for Euros 28 million. At 31 October 2019, the investment property had a fair value of Euros 24 million. The company uses the fair value model in accounting for its investment properties. XYZ would like advice on how to treat this transactions in the financial statement for the year ended 31 October 2019.
Exchange rates
Date | Euro:$ | Average rate for year to that date (Euro: $) |
1 November 2017 | 1.1 | |
31 October 2018 | 1.4 | 1.2 |
1 November 2018 | 1.4 | |
31 July 2019 | 1.6 | |
31 October 2019 | 1.3 | 1.5 |
Step by Step Solution
3.54 Rating (171 Votes )
There are 3 Steps involved in it
Step: 1
Step 1 Introduction IAS 21 refers to Effects of changes in foreign currency rates This standard help...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