On 1 July 2019, an Australian company Frankston Ltd acquired all the issued shares of in Boston Ltd, a company incorporated in the United States (US). At this date Boston Ltd had the following account balances:

	US$
Bank loan	4 000
Plant and equipment	4 200
Cash and debtors	400
Inventory	2 000
Retained earnings	600

Other account balances for Boston Ltd at 30th June 2020 are as follows:

	US$ Dr	US$ Cr
Share capital		2 000
Retained earnings		1 200
Bank loan		4 000
Accounts payable		1 600
Sales		10 000
Plant and equipment	3 800
Cash and debtors	3 200
Inventory	1 800
Purchases	8 000
Administration expense	300
Depreciation expense	400
Income tax expense	500

Exchange rates for the year ending 30 June 2020 are as follows:

1 July 2019	US$1 = A$1.50
30 June 2020	US$1 = A$1.70
Average for year	US$1 = A$1.60
Ending inventory acquired (before year end)	US$1 = A$1.65

Required:

a) Prepare the Statement of profit or loss and other comprehensive income and the statement of financial position of the foreign operation at 30 June 2020, assuming that the US dollar is the functional currency of Boston Ltd and the Australian dollaris the presentation currency of the group.

b) Calculate the foreign currency translation reserve.

Boston Ltd

Statement of profit or loss and other comprehensive income for the year ending 30 June 2020

	US $	Rate	A$
Sales
Less: Cost of sales
Inventory 1 July 2019
Purchases
Inventory 30 June 2020
Administration expenses
Depreciation expense
Profit before tax
Income tax expense
Profit after tax
Other comprehensive income
Increase in foreign currency translation reserve
Total comprehensive income

Statement of financial position as at 30 June 2020

Assets	US $	Rate	A$
Cash and debtors
Inventory
Plant and equipment
Liabilities
Accounts payable
Bank loan
Net Assets
Equity
Share capital
Retained profits
Foreign currency translation reserve

Foreign currency translation reserve: