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Hemlock Co sold a machine to Poisson SA, a French company which it agreed to invoice in €.
The sale was made on 1 October 20X6 for €250,000. €155,000 was received on 1 November
20X6 and the balance is due on 1 January 20X7.
The exchange rate moved as follows:
1 October 20X6 – €0.85 to $1
I November 20X6 — €0.84 to $1
31 December 20X6 – €0.79 to $1At what amount will the receivable of €155,000 be shown in the financial statements at 31
December 20X6?
a)$130,200
b)$196,203
c)$183,253
d)$184,524I feel this question is incorrect as the amount of 155000 is already paid by Poisson, then how can it be left as receivable? The answer according to BPP is b)196203. Please guide if i am incorrect.
Hi,
Yes, it doesn’t appear to make sense as if we’ve received €155,000 then the outstanding receivable at the reporting date is €95,000 and it is this amount that we would be required to translate.
Not sure I can do anything further on this one given there looks to be an error in the question.
Thanks
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