2a. On 1 June 200, an entity based in Country A with a functional currency of CU buys an investment property in Country B with local currency FCU for FCU500,000. The fair value of the investment property is reliably measurable in FCU without undue cost or effort on an ongoing basis. Consequently, in accordance with Section 16 Investment Property, the entity measures its investment property, after initial recognition, at fair value through profit or loss. The entity has a year-end of 31 December. The spot exchange rates and fair values of the investment property (FVIP) are as follows: - 1 June 20X0: CU1 = FCU1.1 and FVIP = FCU500,000 - 31 December 20X0: CU1 = FCU1.05 and FVIP = FCU520,000 - 31 December 20X1: CU1=FCU1.2 and FVIP=FCU40,000 On 1 April 202 the investment property is sold for FCU570,000 when the exchange rate is CU1 = FCU1.1. Required: i. Make Journal Entries for each of these transactions recognizing the purchase of investment property. (9marks) ii. Show a journal entry Derecognizing it after it is sold. (4marks) b. Entity A is a stand-alone entity (it is not part of a group). Its functional currency is CU. However, Entity A is required by law to present its financial statements in USD, which is the local currency of the country in which it operates. Entity A has a 31 December financial year-end. The exchange rates: - at 31 December 201 and 31 December 202 are CU1 = USD2 and CU1 = USD2.2 CU1 = USD1.9. respectively. - In 202 Entity A paid a dividend of CU3,000 when the rate of exchange was CU1 = Required: USD2.25. i-Prepare a Translated Income Statement using USD currency showing the Translated - The share capital was issued when the exchange rate was CU1 = USD1.8. Profit for the year. ( 10 marks) ii- If the Translation difference converting from CU TO USD IS 12,700 , what is the Total Comprehensive Income for the year ended 20x2? (3 marks) 2a. On 1 June 200, an entity based in Country A with a functional currency of CU buys an investment property in Country B with local currency FCU for FCU500,000. The fair value of the investment property is reliably measurable in FCU without undue cost or effort on an ongoing basis. Consequently, in accordance with Section 16 Investment Property, the entity measures its investment property, after initial recognition, at fair value through profit or loss. The entity has a year-end of 31 December. The spot exchange rates and fair values of the investment property (FVIP) are as follows: - 1 June 20X0: CU1 = FCU1.1 and FVIP = FCU500,000 - 31 December 20X0: CU1 = FCU1.05 and FVIP = FCU520,000 - 31 December 20X1: CU1=FCU1.2 and FVIP=FCU40,000 On 1 April 202 the investment property is sold for FCU570,000 when the exchange rate is CU1 = FCU1.1. Required: i. Make Journal Entries for each of these transactions recognizing the purchase of investment property. (9marks) ii. Show a journal entry Derecognizing it after it is sold. (4marks) b. Entity A is a stand-alone entity (it is not part of a group). Its functional currency is CU. However, Entity A is required by law to present its financial statements in USD, which is the local currency of the country in which it operates. Entity A has a 31 December financial year-end. The exchange rates: - at 31 December 201 and 31 December 202 are CU1 = USD2 and CU1 = USD2.2 CU1 = USD1.9. respectively. - In 202 Entity A paid a dividend of CU3,000 when the rate of exchange was CU1 = Required: USD2.25. i-Prepare a Translated Income Statement using USD currency showing the Translated - The share capital was issued when the exchange rate was CU1 = USD1.8. Profit for the year. ( 10 marks) ii- If the Translation difference converting from CU TO USD IS 12,700 , what is the Total Comprehensive Income for the year ended 20x2
