Lion Ltd is an international company resident in Singapore. It acquired the issued shares of an Australian company, Koala Ltd, on 1 July 2016 for a $700,000.
At 30 June 2017, the following information was available about the two companies.
|Lion Ltd||Koala Ltd|
|Retained earnings as at 1/7/16||330,000||170,000|
|Accumulated depreciation – plant||210,000||160,000|
|Shares in Koala Ltd||336,000||–|
|Cost of sales||390,000||120,000|
|Depreciation – plant||85,000||40,000|
- Sales, purchases and other expenses were incurred evenly throughout the 2016–17 period. The dividend was paid by Koala Ltd on 1 January 2017, while the dividend was declared on 30 June 2017.
- Koala Ltd acquired a $100,000 additional new plant on 1 January 2017. Of the depreciation charged in the 2016–17 period, a $8,000 related to the new plant.
- The rates of exchange between the Australian dollar and the Singapore dollar were (expressed as A$1 = S$):
|Average for the 2016-17 period||0.65|
- The functional currency of Koala Ltd is the Australian dollar.
- Translate the financial statements of Koala Ltd into Singapore dollars for inclusion in the consolidated financial statements of Lion Ltd.
- Verify the translation adjustment.
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