Page 23 - Chapter 22 - Foreign Exchange (Cont.)
P. 23
Solution: Foreign Exchange
Year ended 28 February 2014
No deduction since debt not yet incurred
Rnil
Year ended 28 February 2015
Cost of stock [FC100 000 × 7,50 (spot rate)]
Deduction – s 11(a) (R750 000)
Exchange difference
Debt: FC100 000 × (7,60 – 7,50) (loss) (R10
000)
Affected FEC(2014): FC100 000 × (7,23 – 7,20) (gain) R3 000
Affected FEC: FC100 000 × (7,60 – 7,23) (gain) R37 000
Total deduction in 2014 year of assessment (R720 000)
• Note: The total deduction is equal to the total amount incurred
under the FEC contract for the FC100 000 purchased (FC100
000 x R7.20).
