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QUESTION 6

1. Master Limited has the following items in its statement of profit or loss and other comprehensive income for the year ended 30 June 2017:

   Revenue	FC*130,000
   Cost of goods sold	FC45,000
   Other expenses	FC14,000
   Income tax expense	FC12,000

   *FC = Foreign Currency.

   All items were earned and incurred evenly across the year. The following exchange rates applied:

   End of reporting period FC1 = $1.44

   Average rate for year FC1 = $1.42

   The net profit after tax translated into the presentation currency is:

   		$41,549.
   		$40,972.
   		$83,780.
   		$84,940.

0.2 points

QUESTION 7

1. Banjo Ltd acquired 100% of Wellington Ltd on 1 July 2018. The balance sheet of Wellington Ltd on that date was as follows:

   Balance sheet at 1 July 2018
   		NZ$				NZ$
   Machinery at cost		560,000		Share capital		400,000
   Investment property		400,000		General reserve		200,000
   Receivables		100,000		Retained earnings		600,000
   Cash		140,000				1,200,000
   		1,200,000

   The balance sheet of Wellington Ltd as at 30 June 2019 is as follows:

   Balance sheet as at 30 June 2019

   		NZ$				NZ$
   Machinery carrying value		300,000		Share capital		400,000
   Investment property		400,000		General Reserve		200,000
   Receivables		500,000		Retained earnings		1,000,000
   Cash		600,000		Accounts payable		170,000
   				Income tax payable		30,000
   		1,800,000				1,800,000

   Relevant exchange rates are as follows:

   		NZ$		A$
   1 July 2018		1.00	=	0.95
   30 June 2019		1.00	=	0.85
   Average 2018-19		1.00	=	0.90

   If the functional currency of Wellington Ltd is New Zealand dollars and the presentation currency is Australian dollars the total assets of NZ$1,800 000 would translate into Australian dollars as:

   		$1,560,000
   		$1,710,000
   		$1,620,000
   		$1,530,000

0.2 points

QUESTION 8

1. Alpine Limited has the following items in its statement of profit or loss and other comprehensive income:

   	NZ$
   Revenue	140,000
   Cost of goods sold	85,000
   Interest expense	14,000
   Income tax expense	12,000

   All items arose evenly across the year. The following exchange rates applied: End of reporting period NZ$1.00 = A$0.90 Average rate for year NZ$1.00 = A$0.85 The net profit after tax translated into the presentation currency of A$ is:

   		$34,118.
   		$46,750.
   		$24,650.
   		$26,100.

0.2 points

QUESTION 9

1. Which of the following statements is incorrect?

   		Movements in the foreign currency translation reserve must be disclosed.
   		Exchanges differences included in profit or loss must be disclosed.
   		There is no need to disclose if the presentation currency is different from the functional currency.
   		AASB121/ IAS 21 The Effects of Changes in Foreign Exchange Rates requires disclosures about the translation of financial statements into other currencies.

0.2 points

QUESTION 10

1. Under AASB 121 The Effects of Changes in Foreign Exchange Rates, an entity must disclose which of the following items in particular? I. The amount of exchange differences included in profit or loss of the period. II. The amount of the exchange difference included directly in share capital during the period. III. Whether a change in the functional currency has occurred. IV. The reason for using a presentation currency that is different from the functional currency.

   		II and III only.
   		I, II, III and IV.
   		I, III and IV only.
   		I and IV only.

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