Page 26 - Chapter 22 - Foreign Exchange (Cont.)

Example: Acquisition Of Assets

A Ltd’s (registered VAT vendor) year of assessment ends

on the last day of February. On 1 November 2014 the

company purchases a second-hand machine from a

supplier in another country for a foreign currency (FC)

amount of FC100 000. The supply is free-on-board

(FOB) and the machine is delivered at the company’s

premises on 15 February 2015 and brought into use on 1

April 2015.

A Ltd incurs the following costs in addition to the

purchase price:

• Freight and insurance R10 000

• Import duty R45 000

• VAT R57 120