New Horizon Ltd is an Australian company. The Australian dollar is its functional currency. On 1 October 2018, New Horizon Ltd entered into a binding agreement with a German company to construct a plant for New Horizon. The cost of the plant was U.S. $2 750 000. The plant was completed on 17 October 2019 and shipped FOB Hamburg on that date. New Horizon made the full payment for the plant on 31 October 2019. Each year New Horizon’s financial year ends on 31 December.
Assume the following were the exchange rates on different dates:
1 October 2018: Aus $1 = U.S. $0.6975
31 December 2018: Aus $1 = U.S. $0.7105
1 October 2019: Aus $1 = U.S. $0.6825
17 October 2019: Aus $1 = U.S. $0.7005
31 October 2019: Aus $1 = U.S. $0.7585
31 December 2019: Aus $1 = U.S. $0.7395
Record the journal entries on the relevant dates in the books of New Horizon Ltd.
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