On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, wch requires the New Zealand

Excerpt
June 2021 A$1.00 = NZ$1.25 Required: a) Determine the amount in AUD, as at: • 1 March 2020; and • 30 June 2020. b) Prepare the journal entries for the above dates, up to 1 June 2021, showing the amount of exchange gain or loss

On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, wch requires the New Zealand Company to construct an item of macnery for Holmes Ltd. The cost of the macnery is NZ$750,000. The macnery is completed on 1 June 2021 and spped FOB Auckland on that date. The debt is unpaid at 30 June 2020, wch is also Holmes Ltd’s reporting date. The exchange rates at the relevant dates are: 1 March 2020 A$1.00 = NZ$1.20 30 June 2020 A$1.00 = NZ$1.30 1 June 2021 A$1.00 = NZ$1.25 Required: a) Determine the amount in AUD, as at: • 1 March 2020; and • 30 June 2020. b) Prepare the journal entries for the above dates, up to 1 June 2021, showing the amount of exchange gain or loss

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