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Questions Ch21

The document outlines an assignment question for ACCT4104 regarding the translation of financial statements from Hong Kong dollars to Singaporean dollars for Lantau Ltd, acquired by Faber Ltd. It includes a trial balance for Lantau Ltd as of June 30, 2016, along with additional information such as exchange rates, inventory acquisition, and tax rates. The task requires preparing Lantau Ltd's financial statements in Singaporean dollars as of the specified date.

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40 views2 pages

Questions Ch21

The document outlines an assignment question for ACCT4104 regarding the translation of financial statements from Hong Kong dollars to Singaporean dollars for Lantau Ltd, acquired by Faber Ltd. It includes a trial balance for Lantau Ltd as of June 30, 2016, along with additional information such as exchange rates, inventory acquisition, and tax rates. The task requires preparing Lantau Ltd's financial statements in Singaporean dollars as of the specified date.

Uploaded by

tsoiwinzheng
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACCT4104_Advanance financial accounting

Assignment question for Ch.24: Ex 24.2

Exercise 24.2 Translation of financial statements into functional currency


Faber Ltd, a company incorporated in Singapore, acquired all the issued shares of Lantau Ltd, a Hong Kong
company, on 1 July 2015. The trial balance of Lantau Ltd at 30 June 2016 was:

HK$ HK$
Dr Cr
Share capital 800 000
Retained earnings (1/7/15) 240 000
General reserve 100 000
Payables 160 000
Deferred tax liability 120 000
Current tax liability 20 000
Provisions 80 000
Sales 610 000
Proceeds on sale of land 250 000
Accumulated depreciation — plant 340 000
Plant 920 000
Land 400 000
Cash 240 000
Accounts receivable 300 000
Inventory at 1 July 2015 60 000
Purchases 260 000
Depreciation — plant 156 000
Carrying amount of land sold 200 000
Income tax expense 50 000
Other expenses 134 000
2 720 000 2 720 000

Additional information

1. Exchange rates based on equivalence to HK$1 were:

S$
1 July 2015 0.2
8 October 2015 0.25
1 December 2015 0.28
1 January 2016 0.3
2 April 2016 0.27
30 June 2016 0.22
Average during last quarter 2015–16 0.23
Average 2015–16 0.26

2. Inventory was acquired evenly throughout the year. The closing inventory of HK$60 000 was
acquired during the last quarter of the year.
3. Sales and other expenses occurred evenly throughout the year.
4. The Hong Kong tax rate is 20%.
5. The land on hand at the beginning of the year was sold on 8 October 2015. The land on hand
at the end of the year was acquired on 1 December 2015.
6. Movements in plant over 2015–16 were:

Plant at 1 July 2012 HK$600 000


Acquisitions — 8 October 2015 200 000
— 2 April 2016 120 000
Plant at 30 June 2016 920 000

7. Depreciation on plant is measured at 20% per annum on cost. Where assets are acquired
during a month, a full month's depreciation is charged.
8. The functional currency of the Hong Kong operation is the Singaporean dollar.

Required

1. Prepare the financial statements of Lantau Ltd in Singaporean dollars at 30 June 2016.

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