Question

On 1 July 2019, an Australian company Afghanistan Ltd acquired all the issued shares of Brazil Ltd, a company incorporated in the United States (US). At this date Brazil Ltd had the following account balances: US$ Bank loan 4 000 Plant and equipment 4 200 Cash and debtors 400 Inventory 2 000 Retained earnings 600 Other account balances for Brazil Ltd at 30 June 2020 are as follows: US$ Dr US$ Cr Share capital 2 000 Retained earnings 1 200 Bank loan 4 000 Accounts payable 1 600 Sales 10 000 Plant and equipment 3 800 Cash and debtors 3 200 Inventory 1 800 Purchases 8 000 Administration expense 300 Depreciation expense 400 Income tax expense 500 Exchange rates for the year ending 30 June 2020 are as follows: 1 July 2019 US$1 = A$1.50 30 June 2020 US$1 = A$1.70 Average for year US$1 = A$1.60 Ending inventory acquired (before year end) US$1 = A$1.65 1) US dollar is the functional currency of Brazil Ltd and the Australian dollar is the presentation currency of the group: a) Prepare the Statement of profit or loss and other comprehensive income and the statement of financial position of the foreign operation at 30 June 2020. b) Calculate the foreign currency translation reserve. (AUSTRALIAN ACCOUNTING STANDARD)

          On 1 July 2019, an Australian company Afghanistan Ltd acquired
all the issued shares of Brazil Ltd, a company incorporated in the
United States (US). At this date Brazil Ltd had the following
account balances:
US$
Bank loan
4 000
Plant and equipment
4 200
Cash and debtors
   400
Inventory
2 000
Retained earnings
   600
Other account balances for Brazil Ltd at 30 June
2020 are as follows:
US$  Dr
US$  Cr
Share capital
  2 000
Retained earnings
  1 200
Bank loan
  4 000
Accounts payable
  1 600
Sales
10 000
Plant and equipment
3 800
Cash and debtors
3 200
Inventory
1 800
Purchases
8 000
Administration expense
  300
Depreciation expense
  400
Income tax expense
  500
Exchange rates for the year ending 30 June 2020 are as
follows:
1 July 2019
US$1 = A$1.50
30 June 2020
US$1 = A$1.70
Average for year
US$1 = A$1.60
Ending inventory acquired (before year end)
US$1 = A$1.65
1) US dollar is the functional currency of Brazil Ltd and the
Australian dollar is the presentation currency of the group:
a)             Prepare
the Statement of profit or loss and other comprehensive income and
the statement of financial position of the foreign operation at 30
June 2020. 
b)        Calculate the
foreign currency translation reserve. 
(AUSTRALIAN ACCOUNTING STANDARD)

Added by John G.

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