Question 1Firee Ltd has a year end of 28 February and a functional currency of Rands. On 1 March 2016Firee Ltd took out a loan from UK company for £350 00. Interest is payable annually in arrearson 28 February each year at a rate of 5% per annum. The loan is repayable in full on 28 February2018. There have been no repayments on the loan before the 28 February 2018.REQUIRED:Date1 March 201628 February 201728 February 2018Average rate 2017Average rate 2018R/£ exchange rateR21-77R16.25R16.77R16.15R16.201.1 Calculate the exchange differences arising on the loan balance from initial recognition on 1March 2016 to settlement on 28 February 2018.1.2 Calculate the interest accruals and interest payments for February 2017 and February 2018.Show any exchange differences arising on payment. Indicate whether the difference is a gain orloss.1.3 Record the journal entry to recognize the loan on 1 March 2016.Record the journal entries that would be required on 28 February 2017 with respect to theloan and interest.

Journal entries (JE) refers to the entries which reports the daily transactions or the events of…

Firee Ltd has a year end of 28 February and a functional currency of Rands. On 1 March 2016 Firee Ltd took out a loan from UK company for £350 00. Interest is payable annually in arreal on 28 February each year at a rate of 5% per annum. The loan is repayable in full on 28 February 2018. There have been no repayments on the loan before the 28 February 2018. Date 1 March 2016 28 February 2017 28 February 2018 Average rate 2017 Average rate 2018 R/£ exchange rate R21.77 R16.25 R16.77 R16.15 R16.20

Firee Ltd has a year end of 28 February and a functional currency of Rands. On 1 March 2016 Firee Ltd took out a loan from UK company for £350 00. Interest is payable annually in arreal on 28 February each year at a rate of 5% per annum. The loan is repayable in full on 28 February 2018. There have been no repayments on the loan before the 28 February 2018. Date 1 March 2016 28 February 2017 28 February 2018 Average rate 2017 Average rate 2018 R/£ exchange rate R21.77 R16.25 R16.77 R16.15 R16.20

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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