Question
(a)Public Bhd, a company incorporated in Malaysia, whose functional currency is the Ringgit Malaysia (RM) and whose year ends on 31 December, has two overseas
(a)Public Bhd, a company incorporated in Malaysia, whose functional currency is the Ringgit Malaysia (RM) and whose year ends on 31 December, has two overseas subsidiaries. Public is preparing to finalise its financial statements for the year ended 31 December 2019 and has the following inter-company accounts with the two subsidiaries:
(i)A loan of INR8 million to Republic, a company in India whose functional currency is the Indian Rupee (INR), which has been outstanding since the acquisition of Republic in 2015 and which it does not regard as repayable in the foreseeable future.
(ii)A trade receivables account balance amounting to RM300,000 from Private, a foreign company whose functional currency is the Rupiah, held in the books of Private at 725 million Rupiah.
(iii)A short-term loan of INR4 million to Private taken out on 30 June 2019 and repayable on 30 June 2020.
The relevant exchange rates are as follows:
At 31 December 2018
RM1 = INR2.2
At 30 June 2019
RM1 = INR2
RM1 = 2,570 Rupiah
INR1 = 1,500 Rupiah
At 31 December 2019
RM1 = INR1.7
RM1 = 2,400 Rupiah
INR1 = 1,750 Rupiah
Required:
(i)Compute the exchange differences, if any, to be recognised in 2019 for theabove itemsandexplaintheirrespectivetreatmentinthe separate financial statements of: (income and financial position)
(1)Public
(2)Republic
(3)Private
[6 marks]
Rupiah = Indonesian currency
(ii)Public's presentation currency is the Ringgit Malaysia (RM). Explain, stating your reasons, how the above exchange difference in (a) above should be treated in the consolidated financial position statements of Public.
[5 marks]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started