Page 20 - Chapter 22 - Foreign Exchange (Cont.)
P. 20
Solution
Year ended 28 February 2015
Cost of stock [FC100 000 × 6,60 (spot rate)]
Deduction – s 11(a) (R660 000)
Exchange difference
Debt: FC100 000 × (7,00 – 6,60) (loss) (R40 000)
Forward exchange contract: FC100 000 × (7,36 – 7,20) (this is a foreign
exchange gain since the taxpayer currently would have paid more for the same
FEC) R16 000
Total deduction in 2015 year of assessment (R684 000)
Year ended 28 February 2015
Exchange difference
Debt: FC100 000 × (7,50 – 7,00) (loss) (R50 000)
Forward exchange contract: FC100 000 × (7,50 – 7,36) R14 000
Total deduction in 2014 year of assessment (R36 000)
Total deduction (R720 000)
Total expenditure incurred (FC100 000 × 7,50) – (FC100 000 × (7,50 – 7,20))
(R720 000)
