Hello sir can you help me with this question
Miston buys goods priced at €50000 from a Dutch company on 1november 20X8.The invoice is due for settlement in 2 equal instalments on 1dec 20X8 and 1jan 20X9
The ER :
1Nov20X8 - 1.63 to 1$
1Dec 20X8- 1.61 to 1$
31Dec 20X8-1.64 to 1$
What will be the next exchange gain or loss to be reported in fs of miston at 31dec 20X8?
Can you explain this question plz
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FOREIGN EXCHANGE
4y ago#1Hi,
You need to look at the payable balance at each of the two dates, 1 Dec X8 and 31 Dec X8. At each point the €50,000 balance is in €25,000 chunks due to being paid in equal instalments.
You need to look at what the balance was at 1 Nov X8 in $ using the rate at that date and then the rate at 31 Dec X8 in $ using the rate at that date. The difference is the gain/loss.
Try it and let me know how you get on.
Thanks
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