Dalle Ltd is a UK company which has the pound sterling as its functional currency. The company has the following transactions in Euros (€) during the year to 31 March 2018:

1 January 2018..... Equipment costing €143,750 bought on credit from X.

1 February 2018.... Inventory costing €48,000 bought on credit from Y.

28 February 2018... Paid X in full for the equipment bought on 1 January.

15 March 2018....... Paid Y €13,200 on account for the inventory bought on 1 February.

15 March 2018....... Sold inventory to Z on credit for €77,000.

Exchange rates may be assumed as follows:

1 January 2018............. £1 = €1.25

1 February 2018........... £1 = €1.20

28 February 2018......... £1 = €1.15

15 March 2018............. £1 = €1.10

31 March 2018............. £1 = €1.00

The equipment bought on 1 January 2018 is carried at historical cost in the company's statement of financial position at 31 March 2018. The cost of the company's inventory at that date does not exceed its net realisable value.

(a) Explain the accounting treatment of each of the above transactions.

(b) Calculate the exchange difference for the year to 31 March 2018 and explain how this difference should be dealt with in the company's financial statements.