Question
In: Accounting
(a) Tobaco Berhad, with the Ringgit Malaysia as its functional currency, purchases plant from a foreign...
(a) Tobaco Berhad, with the Ringgit Malaysia as its functional currency, purchases plant from a foreign entity for $18 million on 31 May 2019 when the exchange rate was $2 to RM1. The entity also sells goods to a foreign customer for $10.5million on 30 September 2019, when the exchange rate was $1.75 to RM1. At the entity’s year end of 31 December 2019, both amounts are still outstanding and have not been paid. The closing exchange rate was$1.5 to RM1.
Required:
Explain the accounting treatment for both sale and purchases
transactions for Tobacco Berhad. [5 marks]
Solutions
ekkarill92 answered 1 year agoRelated Solutions
(a) Tobaco Berhad, with the Ringgit Malaysia as its functional currency, purchases plant from a foreign...
(a) Tobaco Berhad, with the Ringgit Malaysia as its functional
currency, purchases plant from a foreign entity for $18 million on
31 May 2019 when the exchange rate was $2 to RM1. The entity also
sells goods to a foreign customer for $10.5million on 30 September
2019, when the exchange rate was $1.75 to RM1. At the entity’s year
end of 31 December 2019, both amounts are still outstanding and
have not been paid. The closing exchange rate was$1.5 to...
Question 3 (a) Tobaco Berhad, with the Ringgit Malaysia as its functional currency, purchases plant from...
Question 3
(a) Tobaco Berhad, with the Ringgit Malaysia as its functional
currency, purchases plant from a foreign entity for $18 million on
31 May 2019 when the exchange rate was $2 to RM1. The entity also
sells goods to a foreign customer for $10.5million on 30 September
2019, when the exchange rate was $1.75 to RM1. At the entity’s year
end of 31 December 2019, both amounts are still outstanding and
have not been paid. The closing exchange rate...
(b) Explain how the following events affect the demand of Ringgit Malaysia (RM) and its value....
(b) Explain how the following events affect the demand of
Ringgit Malaysia (RM) and its value. (i) Bank Negara Malaysia
targets a lower interest rates vis-à-vis regional countries. (ii) There is a sudden interest in Malaysian property market
among foreigners. (iii) More international students
coming to study in Malaysia.
Define and explain the terms "foreign exchange exposure risk" and "functional currency."
Define and explain the terms "foreign exchange exposure risk"
and "functional currency." Explain the purpose of using a
functional currency in the translation of financial statements.
If a country ties its currency to a specific foreign currency and allows its holdings of...
If a country ties its currency to a specific foreign currency
and allows its holdings of that currency to govern the country's
money supply, this arrangement is known as a
Select one:
a. currency board.
b. floating exchange rate.
c. monetary union.
d. Special Drawing Right.
A foreign exchange trader based in the US, authorized to borrow $450,000 or its foreign currency...
A foreign exchange trader based in the US, authorized to borrow
$450,000 or its foreign currency equivalent faces the following
quotes:
Spot rate: $1.3000/pound
Six Month Forward: $1.3085/pound
US Interest Rate: 3.0% per annum
UK Interest Rate: 2.0% per annum
Is covered Interest arbitrage possible, and if so, how much
profit can the trader make via 1 covered interest arbitrage
transaction? Please show all steps and work.
Suppose that Apple is analyzing a project of opening a plant in Malaysia to build its...
Suppose that Apple is analyzing a project of opening a plant in
Malaysia to build its smart electric cars. Apple projects cash
flows of (Malaysian Ringgit) MR 10 million for 4 years and a
Terminal value of 28 M as Apple doesn’t intend to stay in the car
industry for long, instead Apple will sell the project at the end
of year 4 at a cash flow of 28 M. The initial investment is
evaluated at MR25 million. The Financial...
Dale plc is a UK company which has the Pound Sterling as its functional currency. The...
Dale plc is a UK company which has the Pound Sterling as its
functional currency. The company has the following transactions in
Euros during the year to 31 December 2010 – the financial years is
from 1 January-31 December
1 October 2010- Inventory costing 50,000 Euros purchased on
credit from Y
1 November 2010- Equipment costing 200,000 Euros purchased on
credit from X and signed a note payable
30 November 2010-Paid Y 30,000 Euros on account for the
inventory bought...
Where does the supply of dollars in the foreign-currency exchange market come from?
Where does the supply of dollars in the foreign-currency
exchange market come from? a. from
Canadian national saving b. from
Canadian net capital outflow c. from
domestic investment d. from
foreign demand for Canadian goods
As a company, what is the single most important reason for hedging its foreign currency risk?...
As a company, what is the single most important reason for
hedging its foreign currency risk? Please elaborate.
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