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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 plzHi,
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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