Question

PPE UK PLC purchased a sophisticated 3D printer for their own use on credit for EUR50,000 on 23 February 2018. The payable was settled on 10 April 2018.

The following were the exchange rates:
23 February 2018 €0.741 : $1 31 March 2018    €0.753 : $1
10 April 2018        €0.731 : $1

At 31 March 2018, which is the entity’s year-end, what amounts would have been held in respect of this transaction?

Select one:

a. Non-current assets at cost of $67,476 and payables of $66,401

b. Non-current assets at cost of $66,401 and payables of $66,401

c. Non-current assets at cost of $67,476 and payables of $67,476

d. Non-current assets at cost of $68,399 and payables of $68,399

Answer 1

Ans:

In case of purchase of Non current assets, the asset should be recorded at price on the date of purchase however account payables are to be recorded at the fair value on the reporting date.

Purchase price 3D Printer : Euro 50,000

Date of purchase : 23 Feb 2018

Exchange rate; 23 February 2018 : €0.741

Non Current asset : 50,000 / 0.741 = $67,476

Reporting date : 31st March 2018

Exchange rate; 31st March 2018 : €0.753

Account Payable : 50,000 / 0.753 = $66,401

So correct answer is Option A.

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