Mars Limited (ML) is listed on Pakistan Stock Exchange (PSX). During the year ended December 31,...

 

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Mars Limited (ML) is listed on Pakistan Stock Exchange (PSX). During the year ended December 31, 2017, ML entered into the following contracts with a USA based company: On December 25, 2017, ML committed to buy certain financial assets on January 27, 2018 for US $ 105,000. The fair value of these assets on statement of financial position date and settlement date was US $ 105,500 and US $ 106,250 respectively. On December 27, 2017, ML agreed sell certain financial assets on January 25, 2018 having a carrying value of US $85,000 [Pakistani Rupees (PKR) 8,916,500] for US $90,000. The fair value of these assets on statement of financial position date and settlement date was US $89,500 and US $ 88,500 respectively. The above types of financial assets are classified by ML as held for trading. Exchange rates on relevant dates are as follows: . Date December 25, 2017 December 27, 2017 December 31, 2017 January 25, 2018 January 27, 2018 PKR per US $ 104.80 104.90 105.20 106.00 106.50 Required: Prepare accounting entries to the above transactions on the relevant dates, in accordance with the IAS 39 - Financial Instruments, using: (i) Trade date accounting (ii) Settlement date accounting Mars Limited (ML) is listed on Pakistan Stock Exchange (PSX). During the year ended December 31, 2017, ML entered into the following contracts with a USA based company: On December 25, 2017, ML committed to buy certain financial assets on January 27, 2018 for US $ 105,000. The fair value of these assets on statement of financial position date and settlement date was US $ 105,500 and US $ 106,250 respectively. On December 27, 2017, ML agreed sell certain financial assets on January 25, 2018 having a carrying value of US $85,000 [Pakistani Rupees (PKR) 8,916,500] for US $90,000. The fair value of these assets on statement of financial position date and settlement date was US $89,500 and US $ 88,500 respectively. The above types of financial assets are classified by ML as held for trading. Exchange rates on relevant dates are as follows: . Date December 25, 2017 December 27, 2017 December 31, 2017 January 25, 2018 January 27, 2018 PKR per US $ 104.80 104.90 105.20 106.00 106.50 Required: Prepare accounting entries to the above transactions on the relevant dates, in accordance with the IAS 39 - Financial Instruments, using: (i) Trade date accounting (ii) Settlement date accounting

Answer rating: 100% (QA)

i Trade date accounting On December 25 2017 Assets Financial assets held for trading 105000 Liabilit... View the full answer