Question

    ABC Ltd purchased an asset of Rs.70 crore. As on date of purchase, 1 USD was equivalent to Rs.70. the company paid after a year when the exchange rate changed to Rs.72.5 for a dollar. What would be the effect of exchange difference? 

    A Profit of Rs.2 crore Correct Answer Incorrect Answer
    B Loss of Rs.2 crore Correct Answer Incorrect Answer
    C Profit of Rs.2.5 crore Correct Answer Incorrect Answer
    D Loss of Rs.2.5 crore Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Asset value = Rs.70 crore Asset value in USD = 70,00,00,000 /70 = USD 10,000,000 = USD 10 mn Loss per USD = 72.5-70 = Rs.2.5 per USD Total loss = 2.5 * 10 mn = 2.5 crore

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