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Compute any unrealised gain on the balance sheet date

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Reference no: EM132974018

On 28 October 20X8, ComTrend Sdn. Bhd. a Malaysian company signed a contract with Global Technology Pte Ltd of Singapore to buy a computer software worth S$300,000. The contract stipulates a payment period of 120 days where the payments are to be made in S$. The exchange rate prevailing at the time of the purchase was S$1 = RM2 (Spot Rate). The financial year of ComTrend Sdn. Bhd. ends at 31 December every year.

Assume that the exchange rates on the balance sheet date and the settlement date are as follows:

Balance sheet date at 31/12/20X8 S$1 = RM2.7
Settlement date at 28/2/20X9 S$1 = RM2.6

Problem (a) Compute any unrealised gain or loss on the balance sheet date and on the settlement date.

Problem (b) Prepare the journal entries for the above transactions at the transaction date, balance sheet date and the settlement date.

Reference no: EM132974018

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