Dell Bhd bought a plant from an Australian company for AUD350,000 on 1 April 2021 when the exchange rate was RM1:AUD 0.3344. Dell Bhd paid AUD100,000 on 1 June 2021 when the exchange rate was RM1:AUD0.3322. The balance was due on 1 June 2022. The exchange rate on 31 December 2021 was RM1:AUD0.3257. The estimated life of the plant was 5 years. Dell Bhd adopts the cost model and uses straight line method for depreciation of its property, plant and equipment based on a monthly basis. The functional currency of Dell Bhd is RM. Required: Show the extracts of the Statement of Profit or Loss for the year ended 31 December 2021 and the Statement of Financial Position as at that date for Dell Bhd to show the effects of the above transactions.

Dell Bhd bought a plant from an Australian company for AUD350,000 on 1 April 2021 when the exchange rate was RM1:AUD 0.3344. Dell Bhd paid AUD100,000 on 1 June 2021 when the exchange rate was RM1:AUD0.3322. The balance was due on 1 June 2022. The exchange rate on 31 December 2021 was RM1:AUD0.3257. The estimated life of the plant was 5 years. Dell Bhd adopts the cost model and uses straight line method for depreciation of its property, plant and equipment based on a monthly basis. The functional currency of Dell Bhd is RM. Required: Show the extracts of the Statement of Profit or Loss for the year ended 31 December 2021 and the Statement of Financial Position as at that date for Dell Bhd to show the effects of the above transactions.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 1ST

See similar textbooks

Similar questions

Wolters Corporation is a U.S. corporation that purchased 50,000 chocolate bars from a foreign manufacturer on March 1, 2024 for 80,000 foreign currency units, to be paid on April 30, 2024. On March 1, 2024 Wolters also entered into a forward contract to purchase 80,000 foreign currency units on April 30, 2024. Wolters has a March 31 year end. Exchange rates are as follows: Date Spot Rate Forward Rate 3/1/24 $0.69 $0.65 3/31/24 $0.61 $0.63 4/30/24 $0.66 $0.66 Required: Prepare the journal entries to record the transactions through April 30, 2024. March 31 is the fiscal period end. Ignore the split between spot gain/loss and time value.
An investor enters a short forward contract to sell 100,000 British pounds for US dollars at an exchange rate of 1.5000 US dollars per pound. How much does the investor gain or lose if the exchange rate at the end of the contract is (a) 1.4900 and (b) 1.5200?
On December 1,2022, DG Computers Inc. purchased 10 personal computers from Japanese firm for P200,000 Japanese yen. The exchange rate for the Japanese yen is P1=¥2.22 on December 1 and P1=¥2.70 on December 31. Compute for any forex gain (loss).
ABC Corporation agreed that it will buy 1,000 USD at an exchange rate of P52 one month from now. The exchange rate on the transaction date is P54. How much is the net gain/(loss) based on the information above?
At the end of 2020, an Italian subsidiary of a U.S. parent reports €1,000,000 in equipment purchased when the exchange rate was $1.40, and €3,000,000 in equipment purchased when the exchange rate was $1.50. The average exchange rate for 2020 is $1.35, and the beginning and ending rates for 2020 are $1.42 and $1.31, respectively. If the Italian subsidiary’s functional currency is the U.S. dollar, the equipment account, in U.S. dollars, is a. $5,240,000 b. $5,350,000 c. $5,400,000 d. $5,900,000
Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 420 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 672,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows: Date U.S. Dollar perBrazilian Real (BRL) September 1, 2020 $ 0.230 December 1, 2020 0.220 December 31, 2020 0.240 March 1, 2021 0.225 Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020? Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021? Assume that Spindler acquired the surfboards on…
On December 12, 2022, Tin Company entered into a forward exchange contract to purchase 500,000 euros in 90 days.The relevant exchange rates are as follows: Spot rate Forward rate (for 3/12/2023)November 30, 2022 P0.56 P0.57December 12, 2022 P0.57 P0.58December 31, 2022 P0.61 P0.60March 12, 2023 P0.62 P0.62 The purpose of this forward contract is to hedge a purchase of inventory in November 30, 2022, payable in March 2023. How much is the net forex gain/loss December 31, 2022? (just encode the absolute amount)
On 1st June 2021, Nutella Ltd, an Australian company with a functional currency of A$, entered business purchasing inventory from their suppliers in Samoa Tala $ when the exchange rate was A$1.00 = Samoan Tala $2.10. On 30thJune 2021 the exchange rate is A$1.00 = Samoan Tala $2.30. The transaction was settled on 10th July 2021 when the exchange rate was A$1.00 = Samoan Tala $2.20 Required Translate the following for initial and Subsequent measurements and calculate the realised gain or loss on translation. 1. Inventories and accounts payable of Samoa Tala $ 100 000