Question
On 1 January 2014, Idea Berhad purchased 100 percent of the equity of Moro Limited, a company in Morocco. At the date of acquisition, Moro
On 1 January 2014, Idea Berhad purchased 100 percent of the equity of Moro Limited, a company in Morocco. At the date of acquisition, Moro Ltd has net identifiable assets at fair value of Moroccan Dirham (MD) 1,890,000 of which, retained earnings was MD90,000. The financial statement of the subsidiary is as given:
Moro Limited Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2016 |
| MD’000 |
Revenue | 500 |
Cost of sales | (200) |
Gross profit | 300 |
|
|
Operating expense | (130) |
|
|
Profit before taxation | 170 |
Taxation | (100) |
Profit after taxation | 70 |
|
|
Other comprehensive income: |
|
Revaluation surplus | 10 |
Total comprehensive income for the year | 80 |
Movement in retained earnings: |
|
Retained earnings as at 1 January 2016 | 382 |
Profit for the year | 70 |
Dividend | (2) |
Retained earnings as at 31 December 2016 | 450 |
Moro Limited Statement of Financial Position As at 31 December 2016 |
|
|
|
| MD’000 |
Non-current assets |
|
|
| 2,000 |
Current assets |
|
|
| 810 |
Total assets |
|
|
| 2,810 |
|
|
|
|
|
|
|
|
| MD’000 |
Equity and Liabilities |
|
|
|
|
Equity |
|
|
|
|
Share capital of MD1 each |
|
|
| 1,600 |
Retained earnings |
|
|
| 450 |
Revaluation reserve |
|
|
| 210 |
|
|
|
| 2,260 |
Current liabilities |
|
|
|
|
Current liabilities |
|
|
| 350 |
Non-current liabilities |
|
|
| 200 |
Total equity and liabilities |
|
|
| 2,810 |
Additional information:
1. Retained earnings as at 31 December 2014 was MD120,000
2. A revaluation exercise was conducted on 1 September 2016 that brought the value of land up by MD10 million.
3. Moro declared and paid dividend on 1 May 2016.
4. Exchange rates were as follows:
Rate | MD1 to RM |
1 January 2014 | 2.00 |
31 December 2014 | 1.97 |
Average from 1 January 2014 to 31 December 2014 | 2.01 |
31 December 2015 | 2.06 |
Average from 1 January 2015 to 31 December 2015 | 1.96 |
1 February 2016 | 2.10 |
1 May 2016 | 2.15 |
1 September 2016 | 2.11 |
31 December 2016 | 2.20 |
Average from 1 January 2016 to 31 December 2016 | 2.05 |
5. All workings may be rounded to the nearest RM0.10 million.
REQUIRED:
Prepare the following translated financial statements of Moro Limited in accordance with MFRS 121 The Effects of Changes in Foreign Exchange Rates, that include:
(a) Statement of Profit or Loss and Other Comprehensive Income for the year ended 31December 2016.
(b) Statement of Financial Position as at 31December 2016.
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