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 $700,000.
At 30 June 2017, the following information was available about the two companies.
| Lion Ltd | Koala Ltd | |
| S$ | A$ | |
| Share capital | 560,000 | 350,000 |
| Retained earnings as at 1/7/16 | 330,000 | 170,000 |
| Provisions | 45,000 | 30,000 |
| Payables | 14,000 | 40,000 |
| Sales | 620,000 | 310,000 |
| Dividend revenue | 6,400 | – |
| Accumulated depreciation – plant | 210,000 | 160,000 |
| 1,785,400 | 1,060,000 | |
| Cash | 92,100 | 30,000 |
| Accounts receivable | 145,300 | 115,000 |
| Inventories | 110,000 | 80,000 |
| Shares in Koala Ltd | 336,000 | – |
| Buildings (net) | 84,000 | 220,000 |
| Plant | 420,000 | 400,000 |
| Cost of sales | 390,000 | 120,000 |
| Depreciation – plant | 85,000 | 40,000 |
| Tax expense | 23,000 | 15,000 |
| Other expenses | 50,000 | 10,000 |
| Dividend paid | 20,000 | 10,000 |
| Dividend provided | 30,000 | 20,000 |
| 1,785,400 | 1,060,000 |
Additional information
- 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$1 = S$):
| 01-Jul-16 | 0.60 |
| 01-Dec-16 | 0.64 |
| 01-Jan-17 | 0.68 |
| 30-Jun-17 | 0.70 |
| Average for the 2016-17 period | 0.65 |
- The functional currency of Koala Ltd is the Australian dollar.
Required
- 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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