Co Y is an associate of Investor Co. Co Y’s functional currency is the USD. Translate the USD financial statements into Investor Co’s presentation currency, the SGD.

Co Y revalued its fixed assets on 31 Dec 20x4.
Assume that sales, purchases, other income, operating expenses, and tax are spread evenly throughout the year.

Investor Co paid US$600,000 to acquire a 40% interest in Co Y on 1 January 20x4. On 1 January 20x4, Co Y had inventory whose fair value exceeded the book value by US$50,000. The inventory was sold on 30 June 20x4. Tax rate is 20% throughout.

Required

(a) Translate the financial statements into the presentation currency.

(b) Show the movements in net exposed items of Co Y for the year ended 31 December 20x5 as an analytical check of your computation.

(c) Prepare the equity accounting entries for Co Y for the year ended 31 December 20x5.

(d) Perform an analytical check of the Investment in Co Y as at 31 December 20x5.

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Sales. Cost of Sales. Opening inventory.. Purchases. Less closing inventory Gross profit Operating expenses. Depreciation Rental income. Interest income Profit before tax.. Tax expense.. Profit after tax Dividends declared.. Profit retained. Retained earnings, 1 Jan 20x5. Retained earnings, 31 Dec 20x5.. 400,000 2,000,000 (500,000) USD 4,500,000 (1,900,000) 2,600,000 (700,000) (100,000) 60,000 90,000 1,950,000 (390,000) 1,560,000 (200,000) 1,360,000 600,000 1,960,000 Rate SGD