问答题

问答题

问答题

问答题(b)Cloud, a public limited company, regularly purchases steel from a foreign supplier and designates a futurepurchase of steel as a hedged item in a cash flow hedge. The steel was purchased on 1 May 2014 and at thatdate, a cumulative gain on the hedging instrument of $3 million had been credited to other comprehensiveincome. At the year end of 30 April 2015, the carrying amount of the steel was $8 million and its net realisablevalue was $6 million. The steel was finally sold on 3 June 2015 for $6·2 million. On a separate issue, Cloud purchased an item of property, plant and equipment for $10 million on 1 May 2013.The asset is depreciated over five years on the straight line basis with no residual value. At 30 April 2014, theasset was revalued to $12 million. At 30 April 2015, the asset’s value has fallen to $4 million. The entity makesa transfer from revaluation surplus to retained earnings for excess depreciation, as the asset is used. Required: Show how the above transactions would be dealt with in the financial statements of Cloud from the date ofthe purchase of the assets. Note: Candidates should ignore any deferred taxation effects. (6 marks) Professional marks will be awarded in question 4 for clarity and quality of presentation.(2 marks)

问答题

问答题