Typical Transaction 14
Example: Currency devalues from 1.7 to 2.0 US Dollar per GB Pound. Currency gain 6,600
|Adjustment for Currency Gain||Decrease in Creditors (-)|
|Increase in Retained Earnings (+)|
|Original||After Changes TT2||After Changes TT8||After Changes TT14|
|Debtors and Prepayments||9,300||9,300||9,300||9,300|
|Other Current Assets (Stock)||0||0||0||0|
|Long Term Liabilities||0||0||0||0|
|Long Term Loan||0||0||0||0|
|TOTAL Liabilities + Equity + Retained Earnings||811,850||805,250||774,450||774,450|
When adjusting for currency gain, a devaluation of the exchange rate USD/GBP from 1.7.to 2.0 the following is observed:
– There is no change in Current Assets
– Creditors decrease by the amount of the currency gain from 6,600 in TT8 down to zero in TT14.
– Current Liabilities decrease by the same amount as the decrease in Creditors, from 6,900 to 300. .
– Loss in the Income Statement decreases by 6,600 from -32,450 to -25,850.
– Equity increases by the amount gained 6,600 up from 767,550 to 774,150.