this document is a complete summary as well as notes taken from all the questions to form a complete summary of all scenarios that form part of one set of consolidated statements. I show you where everything goes as well as how to calculations
ON TRANSACTION DATE : 31 March
Dr PPE 1 788 000
CR creditors 1 788 000
($100 000 x R17.88)
ON YEAR END ( 30 April )
DR exchange rate difference (PL) 39 000
CR Creditors 39 000
($100 000 x 18.27) - 1 788 000)
2) PPE @ REVALUED VALUE
a. Lets say payment occurs on 31 march 2020 (so NO more creditor)
b. And then the PPE is revalued on year end to $110 000
c. Thus there is a revaluation
d. There is NO FCTR affect on the revaluation the exchange rate is only to determine the R value of the
PPE
ON TRANSACTION DATE : 31 March
Dr PPE 1 788 000
CR Bank 1 788 000
($100 000 x R17.88)
ON YEAR END ( 30 April )
DR PPE 221 700
CR Revaluation surplus (OCI) 221 700
($110 000 x 18.27) - 1 788 000)
, 2) IAS 21 with IAS 2 (inventory )
a. The CP on transaction date = use the spot rate on that date
b. NRV @ year end
i. You need to translate at the exchange rate that applies on year end
Example of IAS 21 with inventory
Information
- Purchase inventory in USA on 31 March 2020 for $50 000 (FC= ZAR)
- Payment is made on 31 March 2020
- The year end is 30 April 2020
- NRV on year end is $48 000
exchange rates :
31-Mar $1= R17.88
30-Apr $1= R18.27
ANSWER:
ON TRANSACTION DATE : 31 March
Dr Inventory 894 000
CR Bank 894 000
($50 000 x R17.88)
On 30 APRIL
- Assume we have all the inventory on hand
- Inventory is shown at the LOWER of CP or NRV
ON YEAR END ( 30 April )
DR NRV- write down (PL) 17 040
CR Inventory (SFP) 17 040
(894 000 - ($48 000 x 18.27)
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