Zeppelin Ltd Ordered a Batch of Computers from the USA

question 2

Multiple Choice

Zeppelin Ltd ordered a batch of computers from the USA on 11 November 20X4 for a total price of US$800 000. Zeppelin Ltd’s reporting date is 31 December and its functional currency is A$. The computers were delivered on 23 December 20X4 and payment was made on 15 January 20X5. The risks and benefits of the ownership transfer to the purchaser on delivery. The computers formed part of Zeppelin’s inventory and was still on hand on 31 December 20X4.
$$\begin{array}{l}\text { The following exchange rates applied: }\\\begin{array} { l l l l } 11 \text { November 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.25 \\23 \text { December 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.30 \\31 \text { December 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.35 \\\text { 15 January 20X5 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.20\end{array}\end{array}$$
-At what amount would be purchase of the inventory be recognised?

• A)$615,385
• B)$1,040,000
• C)$1,000,000
• D)$1,080,000

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Definitions:

Promissory Estoppel

A law that stops someone from going back on a commitment they've made to another if the second party has trusted this promise to their own disadvantage.

Promissory Estoppel

A judicial doctrine that forbids a party from revoking an assurance given to another party if the recipient has legitimately acted on that promise to their detriment.

Quasi Contract

A legal concept where a court imposes a contractual obligation on a party who has not expressly consented to it, to prevent unjust enrichment.

Illusory Promise

An agreement that lacks a firm commitment or terms, making it unenforceable by law.