On 1 August 2020, Rose Bhd acquired new equipment with useful life of 10 years to be used for research and development of its product. The cost of the equipment is SGD 50,000. The company paid SGD 25,000 as part of the settlement on 31 December 2020. The exchange rates are provided as follows: 01/08/2020 : RM1 = SGD 3.20 31/12/2020 : RM1 = SGD 3.45 Rose Bhds year end is on 31 December.

1. Explain the initial and subsequent measurement of foreign currency transactions in accordance with MFRS 121 The Effects of Changes in Foreign Exchange Rates. (4 marks) 2.. Based on (14), prepare the journal entries to account for the new equipment