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VERNON CO. – OVERSEAS SALES

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › VERNON CO. – OVERSEAS SALES

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  • June 14, 2025 at 10:12 pm #717938
    teshwar
    Participant
    • Topics: 46
    • Replies: 30
    • ☆☆

    Hi
    I have a question about how fx gain is recognized in the SPL

    Q: (ii) Vernon Co also sold goods to an overseas customer on 1 December 20X8 for 12m Kromits (Kr). They agreed a 60-day payment term. No entries have yet been made to record this sale, although the goods were correctly removed from inventory and expensed in cost of sales. The amount remains unpaid at 31 December 20X8.
    Relevant exchange rates are:
    1 December 20X8: 6·4 Kr/$
    31 December 20X8: 6·0 Kr/$

    I know the $125 should go to profit & loss and it is not Revenue but I don’t understand why it reduces the operating expense account. I plugged $125 in the investment income account but it was wrong. Please help me with this.

    Thanks,

    July 8, 2025 at 1:31 pm #718179
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7187
    • ☆☆☆☆☆

    Hi,

    The gain/loss arises from our day-to-day operations so would be better suited as an operating expense. We’d only use investment income in relation to income from financing activities (e.g. bank interest/dividends received etc.).

    Thanks

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