Answers for Q3

	$CAD	Exchange Rate	$AUD
Sales	825 000
Cost of sales
Opening stock	100 000
Purchases	600 000
Total goods available for sale	700 000
Closing inventory	(300 000)
Cost of goods sold	400 000
Gross profit	425 000
Expenses
Depreciation equipment	39 000
Interest	15 000
Other expenses	166 000
Total Expenses	220 000
Profit before income tax	205 000
Income tax expense	(40 000)
Profit for the period	165 000
Opening Retained Earnings 1/1/19	320 000
Dividend paid	(40 000)
Dividend declared	(25 000)
Closing Retained Earnings 31/12/19	420 000

Answers for Q3 (continued)

	CAD	Exchange Rate	AUD
Cash	385 000
Inventory	300 000
Accounts receivable	250 000
Equipment	220 000
Accumulated depreciation	(80 000)
Land	600 000
TOTAL ASSETS	1 675 000
Accounts Payable	170 000
Provisions	315 000
Loan payable to Kookaburra Ltd	100 000
TOTAL LIABILITIES	585 000
NET ASSETS	1 090 000
Share Capital	600 000
Retained Earnings	420 000
Asset Revaluation Surplus	70 000
TOTAL EQUITY	1 090 000

Additional information relating to Polar Ltd:

1. On 1 April 2019, Polar Ltd acquired new equipment for CAD $100,000. This equipment is depreciated over a five (5) year period. No other additions to Property, Plant and Equipment were made since 1 January 2018, the acquisition date.

2. The interim dividend was paid on 1 April 2019 whilst the final dividend was declared on 31 December 2019.

3. Sales, purchases and expenses for the period ending 31 December 2019 occurred evenly throughout the year. However, the inventory on hand at 31 December 2019 represented purchases made in the final quarter 2019. The opening inventory, as at 1 January 2019 represented purchases made in the final quarter of 2018.

4. The loan of CAD 100, 000 from Kookaburra Ltd was granted to the subsidiary, Polar Ltd on 1 January 2019 for a three (3) year period. The interest rate is charged at 15% per annum. Interest is required to be paid annually on 31 December each year.

5. Polar adopted the revaluation model on 31 December 2018 for the category of Land. This resulted in a revaluation gain of CAD $40,000 recorded as at 31 December 2018 and a further CAD $30,000 gain as at 31 December 2019. This represents the Asset Revaluation Surplus balance recorded as at 31 December 2019 in the books of Polar Ltd.

6. Review of last years working papers for the period ending 31 December 2018 indicated the closing retained earnings was CAD $320,000 which was translated into AUD $208,000 based on the various rates required by the accounting standard.