On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, whichrequires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of themachinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland onthat date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date.The exchange rates at the relevant dates are:1 March 2011 A$1.00 = NZ$1.201 June 2011 A$1.00 = NZ$1.3030 June 2011 A$1.00 = NZ$1.25Required: Prepare the journal entries for the above dates showing the amount of exchange gain or loss
On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, whichrequires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of themachinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland onthat date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date.The exchange rates at the relevant dates are:1 March 2011 A$1.00 = NZ$1.201 June 2011 A$1.00 = NZ$1.3030 June 2011 A$1.00 = NZ$1.25Required: Prepare the journal entries for the above dates showing the amount of exchange gain or loss
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, whichrequires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of themachinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland onthat date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date.The exchange rates at the relevant dates are:1 March 2011 A$1.00 = NZ$1.201 June 2011 A$1.00 = NZ$1.3030 June 2011 A$1.00 = NZ$1.25Required:
Prepare the
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