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Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
Hello John.
Why is it that on the date of the transaction we divide by the lower rate, i.e., 1.4791 to convert to spot, but then while calculating the profit, we divide by 1.4812?
To pay the supplier we are buying $’s and so convert at 1.4791.
We are receiving a $ gain on the futures therefore we need to sell $’s and so convert at 1.4812.
(What they could do is use the $ gain on the futures to part pay the $500,000 and so only the net $ amount would need to be converted at 1.4791). Either is acceptable in the exam.
that was amazing, just one doubt , at the end while we convert the profit to pounds should we use the buy rate ie the smaller rate or sell ie the higher rate ? , as in this case we need to pay dollars hence buy dollars and sell pounds so shouldn’t we be using the buy rate for that conversion?
The profit is calculated in dollars and so to convert it to pounds we need to sell dollars and buy pounds.
I’m so much enjoying the lecture. Thanks John
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What a great lecture! Thanks John
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Thanks to you, AFM finally makes sense to me.
Great 馃檪