Translation into functional and presentation currency    LO4, 5 Canberra Ltd, an Australian company, acquired all the issued shares of Washington Ltd, a US company, on 1 January 2020. At this date, the net assets of Washington Ltd are shown below. US$ Property, plant and equipment 155 000 Accumulated depreciation (30 000) 125 000 Cash 10 000 Inventories 20 000 Accounts receivable 10 000 Total assets 165 000 Accounts payable 15 000 Net assets 150 000 The trial balance prepared by the US company Washington Ltd at 31 December 2020 contained the following information: US$ Dr US$ Cr Share capital 100 000 Retained earnings 50 000 Accounts payable 42 000 Sales 90 000 Accumulated depreciation — plant and equipment 45 000 Property, plant and equipment 155 000 Accounts receivable 40 000 Inventories 45 000 Cash 12 000 Cost of sales 30 000 Depreciation 15 000 Administrative expenses 2 000 Rent expenses 3 000 Insurance expenses 2 500 Wages expenses 20 500 Other expenses 2 000 327 000 327 000 Additional information • No property, plant and equipment were acquired in the period ended 31 December 2020. • All sales and expenses incurred evenly throughout the period. The inventories on hand at the end of the year were acquired during December 2020. • Exchange rates were (A$1 = US$): 1 January 2020 0.52 31 December 2020 0.60 Average for December 2020 0.58 Average for 2019–20 0.56 • The functional currency for Washington Ltd is the US dollar. Required 1. Prepare the financial statements of Washington Ltd at 31 December 2020 in the presentation currency of Australian dollars. 2. Verify the foreign currency translation adjustment. 3. Discuss the differences that would occur if the functional currency of Washington Ltd was the Australian dollar. 4. If the functional currency was the Australian dollar, calculate the foreign currency translation adjustment.