Little Ozzie Battlefield Equipment Ltd acquired 100% ownership of BigTrench plc for A$18 million on 1 July 20X4.At that date net fair value of the identifiable assets and liabilities of BigTrench plc were €10 million.The following exchange rates are given: $\begin{array} { l l l l } \text { 1 July 20X4 } & € 1.00 & = & \mathrm { A } \$ 1.60 \\ \text { 30 June 20X5 } & € 1.00 & = & \mathrm { A } \$ 1.75 \\ \text { 30 June 20X6 } & € 1.00 & = & \mathrm { A } \$ 1.50 \end{array}$ -For the reporting period ending 30 June 20X5 the consolidated financial statements of Little Ozzie Battlefield Equipment Ltd will show

A) goodwill of A$2 187 500 and a translation difference expense of A$187 500 recognised as other comprehensive profit B) goodwill of A$2 187 500 and a translation difference of A$187 500 recognised in period profit or loss C) goodwill of A$2 187 500 and a translation difference revenue of A$187 500 recognised as other comprehensive profit. D) goodwill of A$2 187 500 and a translation difference expense of A$187 500 recognised as other comprehensive profit. A) goodwill of A$2 187 500 and a translation difference expense of A$187 500 recognised as other comprehensive profit B) goodwill of A$2 187 500 and a translation difference of A$187 500 recognised in period profit or loss C) goodwill of A$2 187 500 and a translation difference revenue of A$187 500 recognised as other comprehensive profit. D) goodwill of A$2 187 500 and a translation difference expense of A$187 500 recognised as other comprehensive profit.

Little Ozzie Battlefield Equipment Ltd acquired 100% ownership of BigTrench plc for A$18 million on 1 July 20X4.At that date net fair value of the identifiable assets and liabilities of BigTrench plc were €10 million.The following exchange rates are given: $\begin{array} { l l l l } \text { 1 July 20X4 } & € 1.00 & = & \mathrm { A } \$ 1.60 \\ \text { 30 June 20X5 } & € 1.00 & = & \mathrm { A } \$ 1.75 \\ \text { 30 June 20X6 } & € 1.00 & = & \mathrm { A } \$ 1.50 \end{array}$ -For the reporting period ending 30 June 20X6 the consolidated financial statements of Little Ozzie Battlefield Equipment Ltd will show

A) goodwill of A$1 875 000 and a translation difference expense of A$312 500 which is recognised as other comprehensive profit B) goodwill of A$2 000 000 and a translation difference expense of A$312 500 which is recognised as other comprehensive profit C) goodwill of A$1 875 000 and a translation difference expense of A$125 000 which is recognised as other comprehensive profit D) goodwill of A$1 875 000 and a translation difference revenue of A$312 500 which is recognised as other comprehensive profit A) goodwill of A$1 875 000 and a translation difference expense of A$312 500 which is recognised as other comprehensive profit B) goodwill of A$2 000 000 and a translation difference expense of A$312 500 which is recognised as other comprehensive profit C) goodwill of A$1 875 000 and a translation difference expense of A$125 000 which is recognised as other comprehensive profit D) goodwill of A$1 875 000 and a translation difference revenue of A$312 500 which is recognised as other comprehensive profit

Exam 23: Translation of Foreign Currency Statements

AASB 121 regulates the hedging of the net investment in a foreign operation but not the hedging of individual transactions denominated in a foreign currency.

Free

(True/False)

4.9/5

(40)

Question 1

Correct Answer:

Verified

True

The method used to translate the financial statements relating to a foreign operation depends on the nature of the relationship between the parent entity and the foreign operation.

Free

(True/False)

5.0/5

(41)

Question 2

Correct Answer:

Verified

False

Little Ozzie Battlefield Equipment Ltd acquired 100% ownership of BigTrench plc for A$18 million on 1 July 20X4.At that date net fair value of the identifiable assets and liabilities of BigTrench plc were €10 million.The following exchange rates are given: 1 July 20X4 1.00 = \ 1.60 30 June 20X5 1.00 = \ 1.75 30 June 20X6 1.00 = \ 1.50 -At the control date

Free

(Multiple Choice)

4.9/5

(36)

Question 3

Correct Answer:

Verified

Which of the following is not given in the text as a reasons for allocating FCT reserve proportionately between parent entity owners and non-controlling interest (NCI):

(Multiple Choice)

4.7/5

(36)

Question 4

Ozzie Ltd has control over Islander Ltd.The functional currency of Islander Ltd is the NZ$.On 31 May 20X1 Islander Ltd borrowed NZ$15 million.Ozzie Ltd uses the A$ as its presentation currency.The following spot rates applied. On 31 May 20X1 $\quad$ NZ $\$ 1.00 = A \$ 1.00$ 1 July 20X4 $\quad$ NZ $\$ 1.00 =$ AS0.95 30 June 20X5 $\quad \mathrm { NZ } \$ 1.00 = \mathrm { A } \$ 0.90$ -What is exchange difference on translation of the loan and how is it recognised in Ozzie's financial statements:

(Multiple Choice)

4.7/5

(35)

Question 5

Little Ozzie Battlefield Equipment Ltd acquired 100% ownership of BigTrench plc for A$18 million on 1 July 20X4.At that date net fair value of the identifiable assets and liabilities of BigTrench plc were €10 million.The following exchange rates are given: 1 July 20X4 1.00 = \ 1.60 30 June 20X5 1.00 = \ 1.75 30 June 20X6 1.00 = \ 1.50 -For the reporting period ending 30 June 20X5 the consolidated financial statements of Little Ozzie Battlefield Equipment Ltd will show

(Multiple Choice)

4.8/5

(44)

Question 6

Aus Ltd has control over Hong Ltd.The functional currency of Hong Ltd is HK$, its domestic currency.On 28 February 20X4 Hong Ltd purchased a building for HK$8 million.Aus Ltd uses its domestic currency, the A$, as its presentation currency. The relevant spot rates are: 28 February 20X4 $\quad$ $\quad$ HK$1.00 = $\quad$ A$0.22 1 July 20X6 $\quad$ $\quad$ $\quad$ $\quad$ HK$1.00 = $\quad$ AS0.20 30 June 20X7 $\quad$ $\quad$ $\quad$ HK$1.00 = $\quad$ A$0.17 -What is the amount of this building in Aus Ltd's consolidated financial statements for the reporting period ending 30 June 20X7?

(Multiple Choice)

4.9/5

(33)

Question 7

The presentation currency for consolidated financial statements must be the same as the presentation currency for the parent entity's financial statements.

(True/False)

4.8/5

(44)

Question 8

Which of the following most nearly reflects the requirements of AASB 121?

(Multiple Choice)

4.8/5

(37)

Question 9

Under AASB 121 when an entity gains control of a foreign operation, the amount of the goodwill is measured in the functional currency of the foreign operation, not the functional currency of the parent.

(True/False)

4.9/5

(40)

Question 10

Little Ozzie Battlefield Equipment Ltd acquired 100% ownership of BigTrench plc for A$18 million on 1 July 20X4.At that date net fair value of the identifiable assets and liabilities of BigTrench plc were €10 million.The following exchange rates are given: 1 July 20X4 1.00 = \ 1.60 30 June 20X5 1.00 = \ 1.75 30 June 20X6 1.00 = \ 1.50 -At 30 June 20X5

(Multiple Choice)

4.9/5

(43)

Question 11

Under AASB 121, the process of translation of the financial statements of a foreign operations involves:

(Multiple Choice)

4.8/5

(37)

Question 12

Prior Ltd controls Before Ltd.Prior Ltd's consolidated financial statements will recognise foreign exchange fluctuations on translation of Before Ltd's financial statements:

(Multiple Choice)

4.8/5

(41)

Question 13

Little Ozzie Battlefield Equipment Ltd acquired 100% ownership of BigTrench plc for A$18 million on 1 July 20X4.At that date net fair value of the identifiable assets and liabilities of BigTrench plc were €10 million.The following exchange rates are given: 1 July 20X4 1.00 = \ 1.60 30 June 20X5 1.00 = \ 1.75 30 June 20X6 1.00 = \ 1.50 -For the reporting period ending 30 June 20X6 the consolidated financial statements of Little Ozzie Battlefield Equipment Ltd will show

(Multiple Choice)

4.9/5

(35)

Question 14

Under AASB 121 which of the following is not expressly required when translating financial statements:

(Multiple Choice)

4.9/5

(36)

Question 15

The impact of translating transactions and financial statements from one currency into another:

(Multiple Choice)

4.7/5

(35)

Question 16

Aus Ltd has control over Hong Ltd.The functional currency of Hong Ltd is HK$, its domestic currency.On 28 February 20X4 Hong Ltd purchased a building for HK$8 million.Aus Ltd uses its domestic currency, the A$, as its presentation currency. The relevant spot rates are: 28 February 20X4 $\quad$ $\quad$ HK$1.00 = $\quad$ A$0.22 1 July 20X6 $\quad$ $\quad$ $\quad$ $\quad$ HK$1.00 = $\quad$ AS0.20 30 June 20X7 $\quad$ $\quad$ $\quad$ HK$1.00 = $\quad$ A$0.17 -What is the exchange difference recognised in the reporting period ending 30 June 20X7 on translation of the building's carrying amount and how is it recognised?

(Multiple Choice)

4.8/5

(37)

Question 17

The nature and purpose of the foreign currency translation reserve are both fully explained in AASB 121.

(True/False)

4.8/5

(36)

Question 18

Ozzie Ltd has control over Islander Ltd.The functional currency of Islander Ltd is the NZ$.On 31 May 20X1 Islander Ltd borrowed NZ$15 million.Ozzie Ltd uses the A$ as its presentation currency.The following spot rates applied. On 31 May 20X1 $\quad$ NZ $\$ 1.00 = A \$ 1.00$ 1 July 20X4 $\quad$ NZ $\$ 1.00 =$ AS0.95 30 June 20X5 $\quad \mathrm { NZ } \$ 1.00 = \mathrm { A } \$ 0.90$ -At what amount will the loan be reported in Ozzie's consolidated financial statements for the reporting period ending 30 June 20X5?

(Multiple Choice)

4.9/5

(39)

Question 19

Showing 1 - 19 of 19

AASB 121 regulates the hedging of the net investment in a foreign operation but not the hedging of individual transactions denominated in a foreign currency.

The method used to translate the financial statements relating to a foreign operation depends on the nature of the relationship between the parent entity and the foreign operation.

Which of the following is not given in the text as a reasons for allocating FCT reserve proportionately between parent entity owners and non-controlling interest (NCI):

The presentation currency for consolidated financial statements must be the same as the presentation currency for the parent entity's financial statements.

Which of the following most nearly reflects the requirements of AASB 121?

Under AASB 121 when an entity gains control of a foreign operation, the amount of the goodwill is measured in the functional currency of the foreign operation, not the functional currency of the parent.

Under AASB 121, the process of translation of the financial statements of a foreign operations involves:

Prior Ltd controls Before Ltd.Prior Ltd's consolidated financial statements will recognise foreign exchange fluctuations on translation of Before Ltd's financial statements:

Under AASB 121 which of the following is not expressly required when translating financial statements:

The impact of translating transactions and financial statements from one currency into another:

The nature and purpose of the foreign currency translation reserve are both fully explained in AASB 121.

Companies and Corporate Regulation

Objectives of Company Reporting, Conceptual Elements and Terminology

Forming a Company and Issuing Shares

Profits, Reserve and Distributions to Owners

Reorganisation of Share Capital

Debt Securities

Foreign Currency Transactions and an Introduction to Hedging

Advanced Asset and Liability Issues

Income Tax

Reports and Disclosures I: Overview

Reports and Disclosures Ii: the Financial Statements

Receivership and Voluntary Administration

Liquidations

External Administration Reports and Accounts

Investments in New Assets; Introduction to Business Combinations and Associates

The Corporate Group

Acquisition Method Introduction and Substitution

Acquisition Method Application After Control Date

Intra-Group Transactions

Direct Non-Controlling Interest

Changes to Parent Investment in Subsidiaries

Indirect Interest

Consolidated Cash Flow Statements

Equity Accounting Expanded and Joint Ventures

Segment Reporting

Filters