On 1 March 2020Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021and shipped FOB Auckland on that 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 2020A$1.00 = NZ$1.20 1 June 2020A$1.00 = NZ$1.30 30 June 2020A$1.00 = NZ$1.25 Required: a) Prepare the journal entries for the above dates, up to 1 June 2021,showing the amount of exchange gain or loss.
On 1 March 2020Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021and shipped FOB Auckland on that 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 2020A$1.00 = NZ$1.20 1 June 2020A$1.00 = NZ$1.30 30 June 2020A$1.00 = NZ$1.25 Required: a) Prepare the journal entries for the above dates, up to 1 June 2021,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 2020Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021and shipped FOB Auckland on that 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 2020A$1.00 = NZ$1.20
1 June 2020A$1.00 = NZ$1.30
30 June 2020A$1.00 = NZ$1.25
Required:
a) Prepare the
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