Problem 1
Miston Co buys goods priced at €50,000 from a Dutch company on 1 November 20X8. The
invoice is due for settlement in two equal instalments on 1 December 20X8 and 1 January 20X9.
The exchange rate moved as follows:
1 November 20X8 - €1.63 to $1
1 December 20X8 - €1.61 to $1
31 December 20X8 - €1.64 to $1
What will be the net exchange gain or loss to be reported in the financial statements of Miston
Co at 31 December 20X8? (Enter your answer to the nearest whole $)
Problem 2
Ullington Co's trial balance shows a debit balance of $2.1 million brought forward on current tax
and a credit balance of $5.4 million brought forward on deferred tax. The tax charge for the
current year is estimated at $16.2 million. The carrying amounts of net assets are $13 million in
excess of their tax base, which included a $3 million revaluation surplus on the first-time
revaluation of buildings. The income tax and deferred tax rate is 30%.
Required
What is the amount of income tax recognized in the statement of profit or loss of Ullington Co
for the year?
Problem 3
Jasper Orange Co’s trial balance at 31 December 20X3 shows a debit balance of $700,000 on
current tax and a credit balance of $8,400,000 on deferred tax. The directors have estimated the
provision for income tax for the year at $4.5 million and the required deferred tax provision of
$5.6 million, $1.2 million of which relates to a property revaluation.
Required
What is the amount of income tax amount recognized in Jasper Orange Co’s statement of profit
or loss for the year ended 31 December 20X3?
Problem 4 (Chapter 2)
Tommy Hilfiger sells UV protection jackets to Walmart. The inventory of UV protection jackets
on September 1, 20X2 was $3,500, with invoices unpaid for $500.
During the fiscal year ending August 31, 20X3, UV protection jacket invoices of $5,000 were
paid regarding the amount due, with a costing $300 remaining to be invoiced (unpaid).
At August 31, 20X3, the inventory of UV protection jackets was valued at $2,000.
Required
What is the value of the UV protection jacket that will be charged to Walmart's profit and loss
statement for the year ending August 31, 20X3? (Walmart uses periodic inventory system)
