Hamilton Ltd, a New Zealand company, acquired all the issued shares of Dakota Ltd, a US company on 1 January 2019. After one year operation, Dakota Ltd has prepared its financial statements below in US$ for the year ending 31 December 2019, and sent them to Hamilton Ltd for consolidation. Dakota Ltd Income Statement for the year ending 31 December 2019 Sales Opening Inventory Purchases Closing Inventory Cost of Sales Gross Profit Selling & Administration Expenses Depreciation Total Expenses Net Profit Before Tax Income Tax Net Profit After Tax Opening Retained Earnings as at 1 January 2019 Dividends Closing Retained Earnings US$ 180,000 40,000 110,000 (90,000) (60,000) 120,000 (60,000) (30,000) (90,000) 30,000 (7,500) 22,500 100,000 122.500 Dakota Ltd Balance Sheet as at 31 December 2019 Share Capital Retained Earnings Total Equity Current Liabilities Non-Current Liabilities es Total Liabilities & Equity US$ 200,000 122.500 322,500 84,000 500,000 906.500 Plant & Equipment Cost Plant & Equipment Accumulated Depreciation Plant & Equipment - Net Land Total Non-Current Assets Cash at Bank Accounts Receivable Inventory Total Current Assets Total Assets 310,000 (90,000) 220,000 500,000 720,000 16,500 80,000 90,000 186,500 906,500 You are also provided with the following additional information: No additional Plant & Equipment was acquired after the acquisition on 1 January 2019. Dakota Ltd purchased a parcel of land during the year ended 31 December 2019 for future development. The purchase was financed by a loan. All sales and expenses incurred evenly throughout the period. Taxes incurred evenly throughout the period. Relevant exchange rates were as follows: Date Exchange rate NZ$1 = US$ 0.52 0.52 At the start of the year (1 January 2019) when subsidiary was acquired Opening Inventory and Plant & Equipment on acquisition Average for year ended 31 December 2019 Rate when land was purchased 0.56 0.57 0.58 Average when closing inventory was purchased At the end of the year (31 December 2019) 0.60 REQUIRED: (a) Assuming that the functional currency of Dakota Ltd is the US dollar, translate the financial statements of Dakota Ltd into New Zealand dollars for the year ending 31 December 2019 using the method prescribed at and around paragraph 39 of NZ IAS 21 (i.e., the closing rate method). Complete WORKSHEET 1 on the ANSWER BOOKLET to present your answer. (9 marks) (b) Based on your answer in part (a) of this question, prepare a detailed reconciliation of the closing balance of the Foreign Currency Translation Reserve as at 31 December 2019. Complete WORKSHEET 2 on the ANSWER BOOKLET to present your answer. Show all workings. (4 marks) (c) If the functional currency of Dakota Ltd was the NZ$, describe three differences that would occur compared to the translation prepared in part (a). (Maximum words: 150)