ACCA SBR · Guided practice (Show me how)
Chapter 6: Foreign currency (IAS 21)
Foreign currency transactions and a revalued foreign asset
Chapter 6, Example 1. Jones Inc. has its functional currency as the US dollar. It trades with several suppliers overseas and bought goods costing 400,000 Dinar on 1 December 2015. Jones paid for the goods on 10 January 2016. Jones's year-end is 31 December. The exchange rates were as follows:
| Date | Rate |
|---|---|
| 1 December 2015 | 4.1 Dinar : $1 |
| 31 December 2015 | 4.3 Dinar : $1 |
| 10 January 2016 | 4.4 Dinar : $1 |
The goods were still in inventory at 31 December 2015. Answer to the nearest $.
Chapter 6, Example 2. Flower Inc. acquired an item of property, plant and equipment on 1 January 2011 at cost of 72 million dinars. The property is depreciated straight-line over 25 years, with nil residual value. At 31 December 2015, the property was revalued to 95 million dinars. The following exchange rates are relevant to the preparation of the financial statements:
| Date | Rate |
|---|---|
| 1 January 2011 | 3.6 Dinar : $1 |
| 31 December 2015 | 4.3 Dinar : $1 |
Answer in $m.
Jones: recognition and the year end
Show how the purchase is recorded on 1 December 2015 and how the payable and the inventory are measured in Jones's financial statements at 31 December 2015.
Jones: the payment
Show how the payment on 10 January 2016 is recorded in Jones's financial statements.
Flower: the revalued property
Show how the property is recorded in Flower's financial statements for the year ended 31 December 2015.
Opening this exercise…