20x2. The loan is pay 1 December. раy
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:3 Balcan Ltd prepares its financial statements in its functional currency, the Brazilian real (R$).
Samcun Bhd, a Malaysian company, acquired 75% of the equity of Balcan Ltd on 1 January
20x5. Given below are the financial statements of Balcan Ltd for the year ended 31 December
20x5.
Transcribed Image Text:The exchange difference on translation of Gazebo Ltd's financial statements is €200,000.
Explain the treatment of the translation difference in the consolidated financial statements of
Ferramo Ltd.
6 Gizza Bhd owns 100% of the ordinary shares of Tijuana Ltd whose functional currency is
the Mexican peso. Eventually, Giza Bhd disposes of 30% of its interest in Tijuana Ltd for a
cash consideration of 300,000,000 pesos. Explain how you would account for the cumulative
translation exchange difference in the group's consolidated financial statements in the year
of disposal.
APPLICATION EXERCISES
1 Gajus Berhad, whose functional currency is the Malaysian Ringgit, borrowed BN$8,000,000
from a bank in Brunei on 1 July 20x2. The loan is payable in full on 1 March 20x3. Gajus
Berhad's financial year ends on 31 December.
The spot rates are as follows:
1 July 20x2
BN$1 = RM2.00
31 December 20x2 BN$1 = RM2.25
Required:
(a) Explain how Gajus Berhad should recognize the loan.
(b) Prepare the journal entry to record the loan on 1 July 20x2 and 31 December 20x2.
(c) Explain the treatment of the difference on exchange.
2 Darusan Bhd has the Malaysian Ringgit as its functional currency and 31 December as its
financial year end. On 1 February 20x5, it buys a building in Kuwait for KWD7,000,000 cash.
The useful life of the building is estimated to be 10 years. Darusan Bhd uses the cost model
for all its property, plant and equipment and the straight-line method for depreciation. A full
year's depreciation is charged in the year of purchase and none in the year of disposal.
The spet exchange rates are as follows:
1 February 20x5
KWDI = RM13.20
31 December 20x5
KWDI = RM13.25
Required:
(a) Show how you would recognize the building on 1 February 20x5 and 31 December 20x5
in the books of Darusan Bhd.
(b) Explain the treatment of the depreciation of the building.
3 Balcan Ltd prepares its financial statements in its functional currency, the Brazilian real (R$).
Samcun Bhd, a Malaysian company, acquired 75% of the equity of Balcan Ltd on 1 January
20x5. Given below are the financial statements of Balcan Ltd for the year ended 31 December
20x5.
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