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Unformatted text preview: B407F Week 12 Tutorial Worksheet - Effect of changes in foreign exchange rates Question 1 (a) Journal entries to be made for the year ended 31 December 2008 (all in HK$ million): On 1 February 2008: Debit ($m) Credit ($m) On 1 February 2008: Deposit/prepayment Bank To record the payment of the deposit of EURO 3 million On 1 April 2008: Equipment Deposit/prepayment Payable To record the recognition of the equipment and the corresponding payable On 30 September 2008: Payable Bank Exchange gain To record the settlement of the payable and recognition of the exchange gain On 31 December 2008: Depreciation charge Accumulated depreciation To record the 9 months depreciation charge up to 31 December 2008 b) HKAS 21.39 sets out the requirements for translation of results and financial position of an entity from its functional currency to the presentation currency. At 31 December 2008, the equipment is carried at cost less deprecation of HK$106.93 million (HK$115.6 million less HK$8.67 million). This amount shall be translated at the exchange rate at this date, i.e. HK$11.8 = EURO 1. Accordingly, the equipment would be presented at EURO 9.06 million (HK$106.93 million /HK$11.8)....
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This note was uploaded on 02/24/2012 for the course ACT 407 taught by Professor Mshui during the Fall '11 term at The Open University.
- Fall '11