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Sir just wanted to know why the receivable and revenue not exposed to risk if dinar devalues. And the value of short term payable if dinar devalues shows 1123 from where did this figure came. Thanks
The question says that all sales (and therefore receivables) are denominated in US dollars. So as far as Pondhills Inc is concerned they will not be affected if the dinar devalues.
According to note (ii) of the question, 50% of the payables are owed in sterling. So they will not be affected by the dinar devaluing.
So 50% can be converted at the current rate of 246.3, and the other 50% at the devalued rate of 283.2.Sir, I want to how how the shareholder’s equity of 2.222,after devaluation is calculated.
The receivables and 50% of the payables are not affected by a devaluation, and so their conversion remains at an exchange rate of 246.3.
All the other items in the SOFP are affected by the devaluation, and since the question says a devaluation of 15%, they will be converted at 246.3 x 1.15 = 283.2
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Sir, I can’t get around the figure of 1.123 for short term payables after Dinar devaluation. I calculated 296/283.2=1.045. Where did I go wrong?
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