On 1 June 2022, Dubbo Ltd Acquires Inventories for Cash

question 21

Multiple Choice

On 1 June 2022, Dubbo Ltd acquires inventories for cash of US$400 000. All of the inventories are still on hand at 30 June 2022 and have a net realisable value at that date of US$420 000. Relevant exchange rates are:
1 June 2022     US$1.00 = A$1.30
30 June 2022    US$1.00 = A$1.20
The journal entry recorded by Dubbo Ltd to remeasure the inventories at 30 June 2022 is:

• A) DR Inventories write-down expense A$16 000; CR Inventories A$16 000
• B) DR Inventories write-down expense A$42 000; CR Inventories A$42 000
• C) DR Inventories A$42 000; CR Gain on revaluation (OCI) A$42 000
• D) DR Inventories A$16 000; CR Gain on revaluation (OCI) A$16 000

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