Alpha Co. (whose functional currency is USD) bought an equipment costing EUR40,000 on credit on 1 July 2016. The equipment's estimated useful life is 8 years, with little residual value at the end of useful life. The EUR40,000 was fully paid on 1 February 2017. The EUR/USD spot rates are as follows: EUR/USD spot rates 1-Jul-16 31-Dec-16 1-Feb-17 1.27 1.3 1.31 Requirement Record the journal entries on 1 July 2016, 31 December 2016 and 1 February 2017. (Record depreciation only at year end.)

Alpha Co. (whose functional currency is USD) bought an equipment costing EUR40,000 on credit on 1 July 2016. The equipment's estimated useful life is 8 years, with little residual value at the end of useful life. The EUR40,000 was fully paid on 1 February 2017. The EUR/USD spot rates are as follows: EUR/USD spot rates 1-Jul-16 31-Dec-16 1-Feb-17 1.27 1.3 1.31 Requirement Record the journal entries on 1 July 2016, 31 December 2016 and 1 February 2017. (Record depreciation only at year end.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Alpha Co. (whose functional currency is USD) bought an equipment costing
EUR40,000 on credit on 1 July 2016. The equipment's estimated useful life is
8 years, with little residual value at the end of useful life. The EUR40,000 was
fully paid on 1 February 2017.
The EUR/USD spot rates are as follows:
EUR/USD spot rates
1-Jul-16
31-Dec-16
1-Feb-17
1.27
1.3
1.31
Requirement
Record the journal entries on 1 July 2016, 31 December 2016 and 1 February
2017.
(Record depreciation only at year end.)

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