A Ltd is a Singapore-incorporated company and its functional and presentation currency is Singapore Dollar ($). It adopts Singapore Financial Reporting Standards and presents yearly financial statements with 31 December year-end.

B Bhd is a Malaysia-incorporated company and its functional and presentation currency is Ringgit Malaysia (RM). It adopts Malaysia Financial Reporting Standards and presents yearly financial statements with 31 December year-end.

On 1 January 20x8, A Ltd paid $175,000 to acquire a 100% controlling interest in B Bhd, when the fair value of B Bhd's identifiable net assets was represented by share capital of RM100,000 and retained profit of RM100,000, except for its freehold land, which was carried at cost of RM500,000 but had a market value of RM600,000.

On 1 October 20x8, A Ltd extended an interest-free loan of RM100,000 to B Bhd, for which repayment was not scheduled for. This loan has been properly accounted for as "part of a reporting entity's net investment in a foreign operation" in the respective financial statements of A Ltd and B Bhd.

Profit on sale of land in Malaysia is subject to real property gains tax at a rate of 10%. Except for the Malaysian real property gains tax, ignore deferred tax effects arising from consolidation as they are expected to be immaterial.

The exchange rates were RM1.00 = $0.50 on 1 January 20x8, RM1.00 = $0.38 on 1 October 20x8, and RM1.00 = $0.30 on 31 December 20x8. The average exchange rate for the year 20x8 was RM1.00 = $0.40. The exchange rates when B Bhd was incorporated with the issuance of 100,000 ordinary shares at RM1.00 each in 20x1 and when B Bhd bought the land in 20x2 were RM1.00 = $0.80 and RM1.00 = $0.70 respectively.

All the relevant Singapore Financial Reporting Standards that were issued by the Accounting Standards Council as at 1 January 2021 are assumed to have been effective on 1 January 20x8. There are no significant differences between the Malaysian Financial Reporting Standards and the Singapore Financial Reporting Standards.

The 20x8 financial statements of A Ltd and B Bhd are as follows:

Required:

Verify through independent calculation the amount of Exchange gain/loss arising from the equity loan, state how it should be presented in A Ltds 20x8 consolidated financial statements, and explain why it should be so presented.

(1) Statements of financial position as at 31 December 20x8 A Ltd $'000 B Bhd RM'000 500 Land Investment in B Bhd Equity loan to B Bhd Other assets 175 30 695 900 300 800 300 500 Share capital Retained profit Equity loan from A Ltd Liabilities 100 220 100 380 800 100 900 (2) Statements of profit or loss and other comprehensive income for the year ended 31 December 20x8 Sales Less cost of sales Gross profit Less expenses and losses* Profit before tax Less tax Profit after tax Other comprehensive income Total comprehensive income 4 Ltd S'000 800 300 500 180 320 50 270 B Bhd RM'000 600 400 200 50 150 30 120 270 120 *Includes exchange gain/loss on the equity loan (3) Statements of changes in equity (partial) for the year ended 31 December 20x8 A Ltd $'000 B Bhd RM'000 Retained profit Beginning balance Add profit for the year Less dividend Ending balance 100 120 400 270 170 500 220 (1) Statements of financial position as at 31 December 20x8 A Ltd $'000 B Bhd RM'000 500 Land Investment in B Bhd Equity loan to B Bhd Other assets 175 30 695 900 300 800 300 500 Share capital Retained profit Equity loan from A Ltd Liabilities 100 220 100 380 800 100 900 (2) Statements of profit or loss and other comprehensive income for the year ended 31 December 20x8 Sales Less cost of sales Gross profit Less expenses and losses* Profit before tax Less tax Profit after tax Other comprehensive income Total comprehensive income 4 Ltd S'000 800 300 500 180 320 50 270 B Bhd RM'000 600 400 200 50 150 30 120 270 120 *Includes exchange gain/loss on the equity loan (3) Statements of changes in equity (partial) for the year ended 31 December 20x8 A Ltd $'000 B Bhd RM'000 Retained profit Beginning balance Add profit for the year Less dividend Ending balance 100 120 400 270 170 500 220