1. On 1 January 2019, Umi Bhd, a company incorporated in Malaysia, acquired 80% interest in Adeq Ltd, a company incorporated in Singapore whose functional and presentation currencies are Singapore Dollar (S$). At this date, Adeq Ltd's net assets were represented by share capital of S$3,000,000; revaluation reserve of S$1,000,000, and retained profit of S$1,000,000. The functional and presentation currencies of Umi Bhd are Ringgit Malaysia (RM).

Required:

a)Advise the directors of UMI Bhd of how they should consolidate and translate the foreign subsidiary's statement of comprehensive income for the year ended 31 December 2019 and the statement of financial position as at 31 December 2019 into the presentation currency of parent company.

b) Explain whether or not UMI Bhd (reporting entity) should be allowed to present its financial statements in a currency which is different from its functional currency

c) Assume that on 1 April 2019, UMI Bhd has spent $10million on acquiring a US trading subsidiary, Zoro Ltd and at the year-end the net assets of the US trading subsidiary are also $10m. On consolidation by UMI Bhd, the $10million net assets of the US subsidiary are translated into RM and any foreign exchange differences are taken to reserves. This means that the group's consolidated shareholders' funds will fluctuate up and down as exchange rates move. Advise the directors of UMI Bhd on how to reduce the risk of translation differences. Give an example if necessary.