IN THE NAME OF ALLAH

THE MOST BENEFICIENT

& MERCIFULL
If one does not know to
which port is sailing ,
no wind is favorable .
 DAY - 5
SESSION - 13
IAS – 21 FOREIGN CURRENCY TRANSACTIONS
DEFINITIONS
INDIVIDUAL TRANSACTIONS IN
FOREIGN CURRENCY
TRANSLATION OF FOREIGN CURRENCY
INTO FUNCTIONAL CURRENCY
AT SUBSEQUENT BALANCE
SHEET DATE
 FO R E IG N C U R R E N C Y
C O N V E R S IO N
INDIRECT DIRECT QUOTE
QUOTE $0.017 –
Rs. 60 - 61/$1 0.020/Re.1
Multiply with Divide with
relevant rate relevant rate
Buying 2nd Rate 1st Rate

Selling 1st Rate 2nd Rate

CLASS PRACTICE
QUESTION
(a) Aston plc has a year end of 31 December 20X1.
On 25 October 20X7 Aston plc buys goods from a
japans’ supplier for JY286,000.
On 16 November 20X7 Aston plc pays the Japanese
supplier in full.
The goods remain in stock at the year end.
Exchange rates
25 October 20X7 Re1 = JY 11.16
16 November 20X7 Re1 = JY 10.87
31 December 20X7 Re1 = JY 11.02
Show the accounting entries for these transactions.
(b) On 15 March a company purchases a non-current
asset on one month’s credit for JY 20,000.

Exchange rates
15 MARCH JY 5 = Re.1

31 MARCH JY 4 = Re. 1

Required:
Explain and illustrate how the transaction is recorded
and dealt with given a financial year end of 31 March.
Example:
The following transactions were undertaken by Jeyesplc in the accounting
year ended 31 December 20X7.

Exchange rates JY : Re
1 January 20X7 2.0 : 1
31 March 20X7 2.3 : 1
30 June 20X7 2.1 : 1
30 September 20X7 2.0 : 1
30 November 20X7 1.8 : 1
31 December 20X7 1.9 : 1
Date Narrative Amount JY

1 January 20X7 Purchase of a non-current asset 100,000

31 March 20X7 Payment for the non-current asset 100,000

Purchases on credit 50,000

30 June 20X7 Sales on credit 95,000

30 September 20X7 Payment for purchases 50,000

30 November 20X7 Long-term loan taken out 200,000

Required:
Prepare journal entries to record the above transactions.
Examination Question – Nov 2005
Why do accountants get


excited on Saturdays?
They can wear casual clothes
to work

ALL THE BEST

& GOOD LUCK
IN THE NAME OF ALLAH
THE MOST BENEFICIENT
& MERCIFULL
 Good thoughts are no
better than good dreams ,
unless they be executed .
DAY - 5
SESSION -
11

IAS –


12
TAXES
Accounting Profit or Loss
Taxable Profit or Loss
Tax Expense
Current Tax
Deferred Tax Liability
Deferred Tax Asset
Temporary Differences
Types of Temporary
Differences
Taxable Temporary
Differences
Deductible Temporary
Differences
Tax Base
 Calculation of Income Tax
Expense
 Rs.
 Current Tax for the year xxx

Add/Less: Under or over provision of xxx

income tax of the previous year

Add/Less: Increase or decrease in deferred xxx

tax

xxx
 B a la n ce S h e e t Ite m
Rs.

Non-current liabilities

Deferred tax (closing balance) xx

Current liabilities

Current Tax payable (estimate for the year) xx

 Journal Entries
Date Description L/F Debit Credit
Tax Expense (I/S) xxx
Income Tax Liability (B/S) xxx
(Current tax expense for the year)
 Journal Entries
Date Description L/F Debit Credit
Tax Expense(I/S) xxx
Deferred Tax Liability (B/S) xxx
(Increase in Deferred Tax for the
year)
 Journal Entries
Date Description L/F Debit Credit
Deferred Tax Liability (B/S) xxx
Tax Expense(I/S) xxx
(Decrease in Deferred Tax for the
year)
 Ta x E xp e n se le d g e r
Date Description J/F Amount Date Description J/F Amount
$ $
1/1/07 Balance b/d xxx
Cash
(Tax paid during the xxx Deferred Tax
year) (Decrease in xxx
Deferred Tax)
Deferred Tax
(Increase in deferred Income Statement
tax) Expenses xxx

31/12/07 Balance c/d

xxx xxx
 Deferred Tax ledger
Date Description J/F Amount Date Description J/F Amount
$ $
1/1/07 Balance b/d xxx

Tax Expense xxx Tax Expense xxx

(Decrease in deferred (Increase in
tax) Deferred Tax)

31/12/07 Balance c/d

xxx xxx
Disclosures
 Example
Tree is an incorporated listed company. The following is an extract
of the trial balance at 31 March 20X6:

Rs.000 Rs.000

Tax paid (note 1) 850

Deferred income tax 5,000

The following information is relevant:

(1) The balance on the taxation account of Rs.850,000 in the list of account balances
represents the tax provision for the year to 31 March 20X5 of Rs.9,350,000 finally settled on 31
December 20X5 for Rs.8,500,000.

The provision for income tax for the year to 31 March 20X6 is estimated at Rs.10 million.

(2) The tax rate is 25%.

Temporary differences at 31 March 20X6 were:
Accelerated
Other temporary
tax depreciation
differences Rs.000
18,400
(4,400)

Required:

Prepare the extract of the income statement for Tree for the year to 31 March

20X6, and the balance sheet as at 31 March 20X6.

What does CMA stand


for?
Can't Manage
Anything


ALL THE BEST

& GOOD LUCK
IN THE NAME OF ALLAH
THE MOST BENEFICIENT
& MERCIFULL
The world makes way for
the man who knows where
he is going .
 DAY - 5
SESSION - 11
IAS – 33 EARNING PER SHARE (EPS)
BASIC EPS
EFFECT ON EPS OF BONUS ISSUE

WEIGHTED AVERAGE NUMBER OF

ORDINARY
Total number SHARES
of shares at the start of the xxx
year shares issued at any time of the year xxx
Bonus
Total Weighted average number of xxx
ordinary shares
EFFECT ON EPS OF RIGHT ISSUE AT FULL MARKET
PRICE

WEIGHTED AVERAGE NUMBER OF ORDINARY

SHARES
Total number of shares at the start of the xxx
year issue during the year the year
Right (XX) x xxx
Total Weighted average number of 6/12 xxx
ordinary shares
 EFFECT ON EPS OF RIGHT ISSUE AT LESS
THAN MARKET PRICE

WEIGHTED AVERAGE NUMBER OF ORDINARY

Total SHARES
numberof shares at the start of the year Bonus xxx
(X) issue during the year the year at less than (XX)
Right Fraction
x 6/12 xxx
marketWeighted
Total price average number of ordinary xxx
shares
 BONUS FRACTION

Theoratical Ex-Right Price No Rs.

Number & value of shares before right issue xxx xxx
Number & Value of Right issue xxx xxx
Total Number & value after right issue xxx xxx
DILUTED EPS
D ILU T E D E P S
Why was a cost accountant so
excited that he completed a
jigsaw puzzle in only 59 weeks?
Because on the box it said 8-12
Years.


ALL THE BEST

& GOOD LUCK