Zeppelin Ltd Ordered a Batch of Computers from the USA

question 20

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.
$$\begin{array}{l}\text { The following exchange rates applied: }\\\begin{array} { l l l l } 11 \text { November 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.25 \\23 \text { December 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.30 \\31 \text { December 20X4 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.35 \\\text { 15 January 20X5 } & \text { US } \$ 1.00 & = \mathrm { A } \$ 1.20\end{array}\end{array}$$
-How many A$ will be paid for the computers and what FC exchange difference will be included in Zeppelin's 20X5 financial report in relation to the purchase?

• A)$960 000; $80 000 FC exchange difference expense
• B)$960 000; $80 000 FC exchange difference revenue
• C)$960 000; $120 000 FC exchange difference expense
• D)$960 000; $120 000 FC exchange difference revenue

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