Page 12 - Chapter 22 - Foreign Exchange (Cont.)
P. 12
Example
A Ltd’s year of assessment ends on the last
day of February. On 1 December 2014, the
company purchased trading stock from a supplier in
another country for a foreign currency (FC) amount of
FC100 000. The debt was paid on 31 January 2015. All
trading stock was sold by the end of February 2015.
• Assume that the exchange rates on the relevant dates are
as follows:
• 1 December 2014 : spot rate FC1 = R6,60
• 31 January 2015 : spot rate FC1 = R6,90
• 28 February 2015 : spot rate. FC1 = R7,00
Calculate the effect on the taxable income of A Ltd.
