Page 15 - Chapter 22 - Foreign Exchange (Cont.)

Solution

Sale of trading stock (gross income) 450 000

Acquisition of trading stock (s 11(a))

 (AUS$50 000 × R5,90) (295 000)

Exchange difference on realisation date

 (AUS$50 000 × (R5,90 – R6,15)) (s 24I) (12 500)

Effect on taxable income 142 500