Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

What is the answer on account of revaluation?

A Vendor has raised invoice for £ (GBP)1500 against company "X" on05thJun for supply of goods. Exchange rate on05thJun is1GBP =1.56 USD. The company "X" is reporing financials in currency USD. Exchange rate on30th Jun is1GBP =1.62 USD. The company has not settled to that vendor till30th June.

A. Realised gain USD90.

B. Realised loss USD90

C. Unrealised Loss USD90.

D. Unrealised Gain USD90.

 

 

user-image
Question added by Vijayabharathi Kalyanasundaram (ACMA - INDIA) , Finance Analyst , shell
Date Posted: 2015/06/13
PRADEEP VELAYUDHAN
by PRADEEP VELAYUDHAN , Chief Accountant , Super Group

un realised loss USD90--------------------------

Wasim khan wazir
by Wasim khan wazir , Finance Specialist , Mott Macdonald

Option c. Unrealized loss $90

Deleted user
by Deleted user

C. Unrealised Loss USD90. Since company X has not settled its liability the increase in the rate means an increase in the outstanding payments to the vendor by company X.

thus on5/06 oustanding amount =1.56 x1,500 =2,340

on30/06 oustanding amount =1.62 x1,500 =2,430 giving a difference of USD90

 

The answer is option c : unrealised loss $90 on account of revaluation on30th June.....and it will become realised only when the payment settled to this vendor for this invoice.....it means the net impact of loss or gain including this unrealised loss of $90 has to be accounted to realised gain or loss on the date when the payment settled... thanks for all the responses...

Mrinal Deb
by Mrinal Deb , Manager - Finance and Accounts , Comfort Diagnostic & Nursing Home

Though X company not settled the vendor until30th June It should be realized as a loss of USD90. But if there would be a gain this would not be immediately chargeable until and unless settled the vendor account balance.

Tranquilino Jr Rivera
by Tranquilino Jr Rivera , General Accountant , Enany Group of Companies

Answer is B. On June30, there will be a loss of USD90.00

More Questions Like This