A Ltd is a South African company that sells computer equipment.
On 3 January 20.21 they ordered laptops for the amount of $20 000
from a company in the United States of America.
The inventories were shipped free on board (FOB) on 10 January 20.21.
The transaction is uncovered.
The laptops arrived in South Africa on 24 January 20.21.
The foreign creditor was paid on 10 March 20.21.
The financial year end of A Ltd is 28 February.
On 28 February 20.21 the inventory will be disclosed in the Statement of Financial Position
at an amount of:
The Exchange Rates for 1USD$=R?
3 January 20.21
R14,65
10 January 20.21
R15,30
24 January 20.21
R15,13
28 February 20.21
R15,07
10 March 20.21
R15,16
a.
R293 000
b.
R306 000
c.
R301 400
d.
R303 200
c. R301 400
Calculation:
Cost in USD: $20,000
Exchange rate on 10 January 20.21 (date of purchase): 15.30
Cost in ZAR: $20,000 x 15.30 = R306,000
Since the laptops arrived in South Africa on 24 January 20.21, the exchange rate on that date (R15.13) should be used to convert the cost to ZAR.
Cost in ZAR on 24 January 20.21: $20,000 x 15.13 = R302,600
Since the financial year end of A Ltd is 28 February 20.21, the cost of inventories on that date should be calculated using the exchange rate on that date (R15.07).
Cost in ZAR on 28 February 20.21: $20,000 x 15.07 = R301,400
Therefore, the inventory would be disclosed in the Statement of Financial Position at an amount of R301,400.