Deck 10: Translation and Consolidation of Foreign Currency Financial Statements

Question 1

Foreign currency transactions include:

A) sale of goods to a foreign buyer.
B) purchase of goods from a foreign supplier.
C) borrowing from a foreign lender where the loan is denominated in a foreign currency.
D) all of the above.

Answer 1

D

Question 2

Under the current rate method foreign exchange,differences are recognised in:

A) profit or loss.
B) other comprehensive income.
C) Equity.
D) none of the above.

Answer 2

B

Question 3

Alternative exchange rates that can be used to translate foreign currency amounts are:

A) historical or average.
B) opening or closing.
C) all of the above.
D) none of the above.

Answer 3

C

Question 4

Translation of financial statements into the presentation currency requires:

A) translation of assets and liabilities at the closing rate.
B) translation of revenues and expenses at the historical or average rate.
C) both A and B.
D) none of the above.

Question 5

Under current accounting standards,a company may choose between the current rate and temporal methods of translating foreign currency financial statements.

Question 6

An exchange rate quoted in Australia of AUD1.00 = USD1.05 is an example of:

A) the direct form of exchange rate.
B) the indirect form of exchange rate.
C) neither form.
D) none of the above.

Question 7

When the functional currency of a foreign operation is a foreign currency,translation of financial statements is accomplished through which method?

A) Current rate method
B) Temporal method
C) Either current rate or temporal method
D) None of the above

Question 8

Under the temporal method,all revenue and expense items are translated at:

A) historical rate.
B) average rate.
C) either historical or average rate.
D) none of the above.

Question 9

The primary economic environment in which an entity operates is determined by:

A) currency in which sales are denominated.
B) currency in which costs are denominated.
C) currency in which financing is obtained.
D) all of the above.

Question 10

Discuss the treatment of differences in accounting standards when consolidating foreign operations.

Question 11

What of the following factors indicate that the functional currency of a foreign operation is NOT that of the reporting entity?

A) The activities of the foreign operation are carried out with a significant degree of autonomy.
B) There are no material inter-entity transactions or other exchanges between the foreign entity and the reporting entity.
C) The day-to-day financing of the foreign operation is not supplied by the reporting entity and the cash flows of the reporting entity are largely unaffected by the cash flows of the foreign operation.
D) All of the above.

Question 12

A foreign exchange gain arising from translating financial statements should always be recorded as revenue.

Question 13

The transactions of a foreign company must be recorded in:

A) its functional currency.
B) its presentation currency.
C) either functional or presentation currency.
D) none of the above.

Question 14

Which of the following factors indicate that the functional currency of a foreign operation is that of the reporting entity?

A) The activities of the foreign operation are carried out as an extension of the activities of the reporting entity rather than being carried out with a significant degree of autonomy.
B) Transactions with the reporting entity are a high proportion of the activities of the foreign operation.
C) The day-to-day financing of the foreign operation is supplied by the reporting entity and the cash flows of the foreign operation directly affect the cash flows of the reporting entity.
D) All of the above.

Question 15

The presentation currency will be determined by:

A) requirements of accounting standards.
B) management choice.
C) the domicile of majority shareholders.
D) none of the above.

Question 16

Accounting for a foreign subsidiary must use the 'translate then consolidate' approach.

Question 17

An exchange rate stated in the indirect form as AUD1.25 = USD1.00 represents a reciprocal of:

A) )80.
B) 1.00.
C) 1.25.
D) none of the above.

Question 18

Where the choice of an entity's functional currency is not clear-cut,the choice should be based on currency of largest proportion of export sales.

Question 19

During the year ended 30 June 2007,Johnson Ltd became deeply involved in trade with Malaysia.On 1 July 20X6,the company acquired 50% of the issued capital of a Malaysian palm oil producer,Plantations Berhad,for $7 000 000.For the year ended 30 June 20X7,the following balance sheet and income statement were prepared by Plantations Berhad (amounts in thousands): Income Statement for the Year ended 30 June 2007
$\begin{array}{lll}\text {Profit from continuing activities before tax }&\text { MYR5000 }\\\text {Less income tax expense }&2000\\\text {Profit for the year }&\text { MYR3000 }\\\end{array}$
Balance Sheet as at 30 June 2007
$\begin{array}{lll}\text {Sundry assets }&MYR42 000\\\text {Less sundry liabilities }&20,000\\\text {Net assets }&MYR22 000\\\text {Shareholders' equity }&\\\text {Issued capital }&MYR5000\\\text {Retained earnings }&17,000\\\text {Total shareholders' equity }&MYR22 000\\\end{array}$
Statement of the Movement in Retained Earnings in the Year ended 30 June 2007
$\begin{array}{lll}\text {Retained earnings 1 July 2006 }&\text { MYR15 } 000\\\text {Add profit for the year ended 30 June \( 20X 7 \) }&3000\\\text {Less dividends declared }&1000\\\text {Retained earnings 30 June 2007 }&\text { MYR17 } 000\\\end{array}$
The functional currency of Plantations Berhad was Malaysian Ringgit.The following translation statement was prepared for the company (amounts in thousands):
$\begin{array}{lll}&\text {ringgit}&\text {Factor }&\text { AUD}\\\text {Profit from continuing activities before tax }&MYR5000&1.90&\$2632\\\text {Less income tax expense }&2000&1.90&1053\\\text {Profit for the yea }&3000&&1579\\\text { Add retained earnings 1 July \( 20X6 \)}&15,000&2.00&7500\\\text {Less dividends declared }&1000&1.80&556\\\text {Retained earnings 30 June 2007 }&1700&&8523\\\text {Issued capital }&5000&2.00&2500\\\text {Foreign currency translation reserve }&&&1199\\&\text { MYR22 } 000&&\$12,222\\\text {Sundry assets }&\text { MYR42 } 000&1.80&\$23,333\\\text { Less sundry liabilities}&20,000&1.80&11,111\\\text { Net assets}&\text { MYR22 } 000&&\$12,222\\\end{array}$
Additional information:
A.A deferred tax liability of 30% of the foreign currency translation reserve is to be recognised.
B.On 1 July 20X6,as a partial hedge against its investment in Plantations Berhad,Johnson Ltd took out a three-year loan of MYR8 000 000 from the Bank Negara at 12% interest,with interest payable quarterly commencing 30 September 20X6.
C.On 15 May 20X7,Johnson Ltd placed an order for MYR2 000 000 in merchandise for resale from Malaysian Industries Berhad,payable in USD.The goods were shipped FOB on May 31 with settlement due on 31 July 20X7.
$\text { At relevant dates the exchange rates were: }$
$\begin{array}{lll}1 \text { July } 20X6&\text { AUD1 = MYR2.00 }\\30 \text { September } 20X6&\text { AUD1 = MYR1.95 }\\31 \text { December } 20X 6&\text { AUD1 = MYR1.90 }\\31 \text { March } 20X7&\text { AUD1 = MYR1.90 }\\15 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1 } 1.88=\text { USD } .80\\31 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1.85 = USD } 79\\30 \text { June } 20X7&\text { AUD1 = MYR1.80 = USD.75 }\\\text { Average for the year }&\text { AUD1 }=\text { MYR1 } .90=\text { USD } .78\\\text { 31-July-20X7 }&\text { AUD1 = MYR1.97 = USD } 80\end{array}$
The presentation currency and functional currency of Johnson Ltd was:

A)Malaysian ringgit and Australian dollars respectively.
B)Australian dollars and Australian dollars respectively.
C)Australian dollars and Malaysian ringgit respectively
D)Malaysian ringgit and Malaysian ringgit respectively

Question 20

The term 'foreign currency transaction' refers to a transaction denominated in a currency other than Australian dollars.

Question 21

Where the functional currency of a foreign operation is not that of an Australian company,in translating the financial statements of that operation into the presentation currency of the Australian company:

A) foreign currency monetary items are translated at the closing rate and non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
B) foreign currency monetary items and non-monetary items are translated at the closing rate.
C) foreign currency monetary items and non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
D) none of the above.

Question 22

Discuss whether the use of the current rate method provides adequate disclosure of the exposure of a foreign operation to exchange rate movements.

Question 23

During the year ended 30 June 2007,Johnson Ltd became deeply involved in trade with Malaysia.On 1 July 20X6,the company acquired 50% of the issued capital of a Malaysian palm oil producer,Plantations Berhad,for $7 000 000.For the year ended 30 June 20X7,the following balance sheet and income statement were prepared by Plantations Berhad (amounts in thousands): Income Statement for the Year ended 30 June 2007
$\begin{array}{lll}\text {Profit from continuing activities before tax }&\text { MYR5000 }\\\text {Less income tax expense }&2000\\\text {Profit for the year }&\text { MYR3000 }\\\end{array}$
Balance Sheet as at 30 June 2007
$\begin{array}{lll}\text {Sundry assets }&MYR42 000\\\text {Less sundry liabilities }&20,000\\\text {Net assets }&MYR22 000\\\text {Shareholders' equity }&\\\text {Issued capital }&MYR5000\\\text {Retained earnings }&17,000\\\text {Total shareholders' equity }&MYR22 000\\\end{array}$
Statement of the Movement in Retained Earnings in the Year ended 30 June 2007
$\begin{array}{lll}\text {Retained earnings 1 July 2006 }&\text { MYR15 } 000\\\text {Add profit for the year ended 30 June \( 20X 7 \) }&3000\\\text {Less dividends declared }&1000\\\text {Retained earnings 30 June 2007 }&\text { MYR17 } 000\\\end{array}$
The functional currency of Plantations Berhad was Malaysian Ringgit.The following translation statement was prepared for the company (amounts in thousands):
$\begin{array}{lll}&\text {ringgit}&\text {Factor }&\text { AUD}\\\text {Profit from continuing activities before tax }&MYR5000&1.90&\$2632\\\text {Less income tax expense }&2000&1.90&1053\\\text {Profit for the yea }&3000&&1579\\\text { Add retained earnings 1 July \( 20X6 \)}&15,000&2.00&7500\\\text {Less dividends declared }&1000&1.80&556\\\text {Retained earnings 30 June 2007 }&1700&&8523\\\text {Issued capital }&5000&2.00&2500\\\text {Foreign currency translation reserve }&&&1199\\&\text { MYR22 } 000&&\$12,222\\\text {Sundry assets }&\text { MYR42 } 000&1.80&\$23,333\\\text { Less sundry liabilities}&20,000&1.80&11,111\\\text { Net assets}&\text { MYR22 } 000&&\$12,222\\\end{array}$

In the separate income statement of Johnson Ltd for the year ended 30 June 20X7,the translation gain or loss arising on the loan from the Bank Negara was (rounded to the nearest thousand dollars):
A.a translation gain of $311 111.
B.a translation loss of $444 000.
C.A translation loss of $600 000.
D.nil,as any loss is initially recognised in equity.
A.A deferred tax liability of 30% of the foreign currency translation reserve is to be recognised.
B.On 1 July 20X6,as a partial hedge against its investment in Plantations Berhad,Johnson Ltd took out a three-year loan of MYR8 000 000 from the Bank Negara at 12% interest,with interest payable quarterly commencing 30 September 20X6.
C.On 15 May 20X7 Johnson Ltd placed an order for MYR2 000 000 in merchandise for resale from Malaysian Industries Berhad,payable in USD.The goods were shipped FOB on May 31 with settlement due on 31 July 20X7.
$\text { At relevant dates the exchange rates were: }$
$\begin{array}{lll}1 \text { July } 20X6&\text { AUD1 = MYR2.00 }\\30 \text { September } 20X6&\text { AUD1 = MYR1.95 }\\31 \text { December } 20X 6&\text { AUD1 = MYR1.90 }\\31 \text { March } 20X7&\text { AUD1 = MYR1.90 }\\15 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1 } 1.88=\text { USD } .80\\31 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1.85 = USD } 79\\30 \text { June } 20X7&\text { AUD1 = MYR1.80 = USD.75 }\\\text { Average for the year }&\text { AUD1 }=\text { MYR1 } .90=\text { USD } .78\\\text { 31-July-20X7 }&\text { AUD1 = MYR1.97 = USD } 80\end{array}$


-In the separate income statement of Johnson Ltd for the year ended 30 June 20X7,the translation gain or loss arising on the loan from the Bank Negara was (rounded to the nearest thousand dollars):

A)a translation gain of $311 111.
B)a translation loss of $444 000.
C)A translation loss of $600 000.
D)nil,as any loss is initially recognised in equity.

Question 24

Discuss the objectives of translation of financial statements of foreign operations.

Question 25

Translation of financial statements of foreign operations into the functional currency requires the use of:

A) the current rate method.
B) the temporal method.
C) either the current rate or the temporal method.
D) none of the above.

Question 26

During the year ended 30 June 2007,Johnson Ltd became deeply involved in trade with Malaysia.On 1 July 20X6,the company acquired 50% of the issued capital of a Malaysian palm oil producer,Plantations Berhad,for $7 000 000.For the year ended 30 June 20X7,the following balance sheet and income statement were prepared by Plantations Berhad (amounts in thousands): Income Statement for the Year ended 30 June 2007
$\begin{array}{lll}\text {Profit from continuing activities before tax }&\text { MYR5000 }\\\text {Less income tax expense }&2000\\\text {Profit for the year }&\text { MYR3000 }\\\end{array}$
Balance Sheet as at 30 June 2007
$\begin{array}{lll}\text {Sundry assets }&MYR42 000\\\text {Less sundry liabilities }&20,000\\\text {Net assets }&MYR22 000\\\text {Shareholders' equity }&\\\text {Issued capital }&MYR5000\\\text {Retained earnings }&17,000\\\text {Total shareholders' equity }&MYR22 000\\\end{array}$
Statement of the Movement in Retained Earnings in the Year ended 30 June 2007
$\begin{array}{lll}\text {Retained earnings 1 July 2006 }&\text { MYR15 } 000\\\text {Add profit for the year ended 30 June \( 20X 7 \) }&3000\\\text {Less dividends declared }&1000\\\text {Retained earnings 30 June 2007 }&\text { MYR17 } 000\\\end{array}$
The functional currency of Plantations Berhad was Malaysian Ringgit.The following translation statement was prepared for the company (amounts in thousands):
$\begin{array}{lll}&\text {ringgit}&\text {Factor }&\text { AUD}\\\text {Profit from continuing activities before tax }&MYR5000&1.90&\$2632\\\text {Less income tax expense }&2000&1.90&1053\\\text {Profit for the yea }&3000&&1579\\\text { Add retained earnings 1 July \( 20X6 \)}&15,000&2.00&7500\\\text {Less dividends declared }&1000&1.80&556\\\text {Retained earnings 30 June 2007 }&1700&&8523\\\text {Issued capital }&5000&2.00&2500\\\text {Foreign currency translation reserve }&&&1199\\&\text { MYR22 } 000&&\$12,222\\\text {Sundry assets }&\text { MYR42 } 000&1.80&\$23,333\\\text { Less sundry liabilities}&20,000&1.80&11,111\\\text { Net assets}&\text { MYR22 } 000&&\$12,222\\\end{array}$
Additional information:
A.A deferred tax liability of 30% of the foreign currency translation reserve is to be recognised.
B.On 1 July 20X6,as a partial hedge against its investment in Plantations Berhad,Johnson Ltd took out a three-year loan of MYR8 000 000 from the Bank Negara at 12% interest,with interest payable quarterly commencing 30 September 20X6.
C.On 15 May 20X7 Johnson Ltd placed an order for MYR2 000 000 in merchandise for resale from Malaysian Industries Berhad,payable in USD.The goods were shipped FOB on May 31 with settlement due on 31 July 20X7.
$\text { At relevant dates the exchange rates were: }$
$\begin{array}{lll}1 \text { July } 20X6&\text { AUD1 = MYR2.00 }\\30 \text { September } 20X6&\text { AUD1 = MYR1.95 }\\31 \text { December } 20X 6&\text { AUD1 = MYR1.90 }\\31 \text { March } 20X7&\text { AUD1 = MYR1.90 }\\15 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1 } 1.88=\text { USD } .80\\31 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1.85 = USD } 79\\30 \text { June } 20X7&\text { AUD1 = MYR1.80 = USD.75 }\\\text { Average for the year }&\text { AUD1 }=\text { MYR1 } .90=\text { USD } .78\\\text { 31-July-20X7 }&\text { AUD1 = MYR1.97 = USD } 80\end{array}$
At 30 June 20X7,Johnson Ltd recognised its equity in the dividends declared by Plantations Berhad in its income statement.When the dividend was subsequently received from Plantations Berhad,the exchange rate was AUD1 = MYR1.78.The exchange gain or loss recognised by Johnson Ltd on receiving that dividend was (rounded to the nearest dollar):

A)a gain of $6242.
B)a loss of $3121.
C)a gain of $3121.
D)none of the above.

Question 27

During the year ended 30 June 2007,Johnson Ltd became deeply involved in trade with Malaysia.On 1 July 20X6,the company acquired 50% of the issued capital of a Malaysian palm oil producer,Plantations Berhad,for $7 000 000.For the year ended 30 June 20X7,the following balance sheet and income statement were prepared by Plantations Berhad (amounts in thousands): Income Statement for the Year ended 30 June 2007
$\begin{array}{lll}\text {Profit from continuing activities before tax }&\text { MYR5000 }\\\text {Less income tax expense }&2000\\\text {Profit for the year }&\text { MYR3000 }\\\end{array}$
Balance Sheet as at 30 June 2007
$\begin{array}{lll}\text {Sundry assets }&MYR42 000\\\text {Less sundry liabilities }&20,000\\\text {Net assets }&MYR22 000\\\text {Shareholders' equity }&\\\text {Issued capital }&MYR5000\\\text {Retained earnings }&17,000\\\text {Total shareholders' equity }&MYR22 000\\\end{array}$
Statement of the Movement in Retained Earnings in the Year ended 30 June 2007
$\begin{array}{lll}\text {Retained earnings 1 July 2006 }&\text { MYR15 } 000\\\text {Add profit for the year ended 30 June \( 20X 7 \) }&3000\\\text {Less dividends declared }&1000\\\text {Retained earnings 30 June 2007 }&\text { MYR17 } 000\\\end{array}$
The functional currency of Plantations Berhad was Malaysian Ringgit.The following translation statement was prepared for the company (amounts in thousands):
$\quad$
$\begin{array}{lll}&\text {ringgit}&\text {Factor }&\text { AUD}\\\text {Profit from continuing activities before tax }&MYR5000&1.90&\$2632\\\text {Less income tax expense }&2000&1.90&1053\\\text {Profit for the yea }&3000&&1579\\\text { Add retained earnings 1 July \( 20X6 \)}&15,000&2.00&7500\\\text {Less dividends declared }&1000&1.80&556\\\text {Retained earnings 30 June 2007 }&1700&&8523\\\text {Issued capital }&5000&2.00&2500\\\text {Foreign currency translation reserve }&&&1199\\&\text { MYR22 } 000&&\$12,222\\\text {Sundry assets }&\text { MYR42 } 000&1.80&\$23,333\\\text { Less sundry liabilities}&20,000&1.80&11,111\\\text { Net assets}&\text { MYR22 } 000&&\$12,222\\\end{array}$

A.A deferred tax liability of 30% of the foreign currency translation reserve is to be recognised.
B.On 1 July 20X6,as a partial hedge against its investment in Plantations Berhad,Johnson Ltd took out a three-year loan of MYR8 000 000 from the Bank Negara at 12% interest,with interest payable quarterly commencing 30 September 20X6.
C.On 15 May 20X7 Johnson Ltd placed an order for MYR2 000 000 in merchandise for resale from Malaysian Industries Berhad,payable in USD.The goods were shipped FOB on May 31 with settlement due on 31 July 20X7.
$\text { At relevant dates the exchange rates were: }$
$\begin{array}{lll}1 \text { July } 20X6&\text { AUD1 = MYR2.00 }\\30 \text { September } 20X6&\text { AUD1 = MYR1.95 }\\31 \text { December } 20X 6&\text { AUD1 = MYR1.90 }\\31 \text { March } 20X7&\text { AUD1 = MYR1.90 }\\15 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1 } 1.88=\text { USD } .80\\31 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1.85 = USD } 79\\30 \text { June } 20X7&\text { AUD1 = MYR1.80 = USD.75 }\\\text { Average for the year }&\text { AUD1 }=\text { MYR1 } .90=\text { USD } .78\\\text { 31-July-20X7 }&\text { AUD1 = MYR1.97 = USD } 80\end{array}$


- The transaction involving the purchase of the merchandise inventory from Malaysian Industries by Berhad is:

A)a foreign currency transaction from the viewpoints of both Johnson Ltd and Malaysian Industries Berhad.
B)a foreign currency transaction from the viewpoint of Johnson Ltd,but not a foreign currency transaction from the viewpoint of Malaysian Industries Berhad.
C)not a foreign currency transaction from the viewpoint of Johnson Ltd,but a foreign currency transaction from the viewpoint of Malaysian Industries Berhad.
D)not a foreign currency transaction from the viewpoints of both Johnson Ltd and Malaysian Industries Berhad.

Question 28

The translation gain or loss on a foreign operation using the current rate method represents the effect of exchange rate movements on net assets.

Question 29

Cash flows from foreign operations denominated in a foreign currency will normally be translated using:

A) historical rates.
B) average rates.
C) closing rates.
D) none of the above.

Question 30

A 'natural hedge' occurs when an Australian company's foreign operation is financed using:

A) debt denominated in AUD.
B) debt denominated in the same currency as the investment.
C) debt denominated in any foreign currency.
D) none of the above.

Question 31

During the year ended 30 June 2007,Johnson Ltd became deeply involved in trade with Malaysia.On 1 July 20X6,the company acquired 50% of the issued capital of a Malaysian palm oil producer,Plantations Berhad,for $7 000 000.For the year ended 30 June 20X7,the following balance sheet and income statement were prepared by Plantations Berhad (amounts in thousands): Income Statement for the Year ended 30 June 2007
$\begin{array}{lll}\text {Profit from continuing activities before tax }&\text { MYR5000 }\\\text {Less income tax expense }&2000\\\text {Profit for the year }&\text { MYR3000 }\\\end{array}$
Balance Sheet as at 30 June 2007
$\begin{array}{lll}\text {Sundry assets }&MYR42 000\\\text {Less sundry liabilities }&20,000\\\text {Net assets }&MYR22 000\\\text {Shareholders' equity }&\\\text {Issued capital }&MYR5000\\\text {Retained earnings }&17,000\\\text {Total shareholders' equity }&MYR22 000\\\end{array}$
Statement of the Movement in Retained Earnings in the Year ended 30 June 2007
$\begin{array}{lll}\text {Retained earnings 1 July 2006 }&\text { MYR15 } 000\\\text {Add profit for the year ended 30 June \( 20X 7 \) }&3000\\\text {Less dividends declared }&1000\\\text {Retained earnings 30 June 2007 }&\text { MYR17 } 000\\\end{array}$
The functional currency of Plantations Berhad was Malaysian Ringgit.The following translation statement was prepared for the company (amounts in thousands):
$\begin{array}{lll}&\text {ringgit}&\text {Factor }&\text { AUD}\\\text {Profit from continuing activities before tax }&MYR5000&1.90&\$2632\\\text {Less income tax expense }&2000&1.90&1053\\\text {Profit for the yea }&3000&&1579\\\text { Add retained earnings 1 July \( 20X6 \)}&15,000&2.00&7500\\\text {Less dividends declared }&1000&1.80&556\\\text {Retained earnings 30 June 2007 }&1700&&8523\\\text {Issued capital }&5000&2.00&2500\\\text {Foreign currency translation reserve }&&&1199\\&\text { MYR22 } 000&&\$12,222\\\text {Sundry assets }&\text { MYR42 } 000&1.80&\$23,333\\\text { Less sundry liabilities}&20,000&1.80&11,111\\\text { Net assets}&\text { MYR22 } 000&&\$12,222\\\end{array}$

Additional information:
A.A deferred tax liability of 30% of the foreign currency translation reserve is to be recognised.
B.On 1 July 20X6,as a partial hedge against its investment in Plantations Berhad,Johnson Ltd took out a three-year loan of MYR8 000 000 from the Bank Negara at 12% interest,with interest payable quarterly commencing 30 September 20X6.
C.On 15 May 20X7,Johnson Ltd placed an order for MYR2 000 000 in merchandise for resale from Malaysian Industries Berhad,payable in USD.The goods were shipped FOB on May 31 with settlement due on 31 July 20X7.
$\text { At relevant dates the exchange rates were: }$
$\begin{array}{lll}1 \text { July } 20X6&\text { AUD1 = MYR2.00 }\\30 \text { September } 20X6&\text { AUD1 = MYR1.95 }\\31 \text { December } 20X 6&\text { AUD1 = MYR1.90 }\\31 \text { March } 20X7&\text { AUD1 = MYR1.90 }\\15 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1 } 1.88=\text { USD } .80\\31 \text { May } 20 X 7&\text { AUD1 }=\text { MYR1.85 = USD } 79\\30 \text { June } 20X7&\text { AUD1 = MYR1.80 = USD.75 }\\\text { Average for the year }&\text { AUD1 }=\text { MYR1 } .90=\text { USD } .78\\\text { 31-July-20X7 }&\text { AUD1 = MYR1.97 = USD } 80\end{array}$
In the consolidated balance sheet at 30 June 2007 of the group controlled by Johnson Ltd,the foreign currency translation reserve attributable to the members,the parent entity would be (rounded to the nearest thousand dollars):

A)$311 111.
B)$839 300.
C)$108 538.
D)none of the above.