At 31/3/2020 inventories were valued at ＄36,200. Alfa a USA business had purchased some of its inventories from an overseas supplier on 1/1/2020 for €5,000. These inventories were not included in the inventory count on 31/3/2020. The invoice for the purchase was unpaid at 31/3/2020 and was included in trade payables at the exchange rate on the date of purchase. The exchange rates are as follows:

1/1/20 1  ＄:  €1.1905

31/3/20 1＄: €1.2500

Explain the required IFRS financial reporting treatment of the issue above for the year ended 31/3/2020. Prepare all relevant calculations and set out the required adjustments in the form of journal entries.

On 1 January 2019 Planet plc began constructing an item of Machinery, the details of this are:

• Materials €40,000
• Labour costs 15,000
• Pre-production testing 5,000
• Sale of by-products produced as part of testing process (1,000)
• Site preparation costs 11,000
• Staff training 2,000
• Allocated overheads (60% general administration and 40% directly attributable) 10,000

The plant was completed and became available for use on 1/3/2020.The estimated useful life of the Machine is 10 years. 

Required 

Identify the costs that should be capitalized as part of the plant and the amounts to be written off in the profit and loss.

Answer rating: 100% (QA)

Solution Answer 3 Foreign currency monetary item These are assets and liabilities whose realization ... View the full answer