Page 95 - SBR Integrated Workbook STUDENT S18-J19
P. 95
Foreign exchange in individual financial statements
Example 2
Overseas transactions
Global has a functional currency of the dollar ($). It has entered into some
transactions denominated in dinars. The directors require advice as to how
they should be accounted for.
On 1 November 20X1, Global made a sale on credit for 3 million dinars.
By 31 December 20X1, the invoice has not been settled.
On 1 January 20X1, Global purchased a patent for 10 million dinars in
cash. The patent was attributed a useful life of five years.
On 1 January 20X1, Global purchased some land for 20 million dinars in
cash and classified it as property, plant and equipment. Land is
measured using the revaluation model. At 31 December 20X1, the land
had a fair value of 35 million dinars.
Currency rates during the year were as follows:
Dinars: $1
1 January 20X1 2.0
1 November 20X1 2.5
31 December 20X1 3.0
Explain how the above transactions should be accounted for by Global
in the year ended 31 December 20X1.
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