Zeppelin Ltd Ordered a Batch of Computers from the USA

question 5

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.
$$\begin{array}{l}\text { The following exchange rates applied: }\\\begin{array} { l l l l } 11 \text { November 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.25 \\23 \text { December 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.30 \\31 \text { December 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.35 \\\text { 15 January 20X5 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.20\end{array}\end{array}$$
-What FC exchange difference, if any, will be included in Zeppelin's profit or loss statement for the year ended 31 December 20X4 and at what amount will the FC account payable be recognised in the balance sheet?

• A)FC account payable = 1,080,000; $40,000 FC exchange difference revenue
• B)FC account payable = 1,080,000; $80,000 FC exchange difference revenue
• C)FC account payable = 1,080,000; $40,000 FC exchange difference expense
• D)FC account payable = 1,080,000; $80,000 FC exchange difference expense

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Definitions:

Substance Goals

Goals in negotiation that are concerned with outcomes.

Negotiating

The process of discussing something formally in order to reach an agreement, often in a business or political context.

Distributive Negotiation

Negotiation in which each party makes claims for certain preferred outcomes.

Win-Lose Claims

Situations or assertions in which one side gains what the other side loses, typically in disputes or negotiations.