On 1 July 2019, an Australian company, Sydney Limited, acquired all the issued shares of a United States company, New York Limited, as it looks to expand its operations into new overseas markets The net assets of New York Limited on that date consisted of US$ Share capital 180,000 General reserve 15,000 Retained earnings 75,000 Total equity 270,000 The relevant exchange rates for the period are as follows US$1 A$ 1 July 2019 1 52 Average for year 2019 2020 1 42 30 September 2019 1 48 Average (July 2019 December 19) 1 45 31 December 2019 1 42 Average (January 2020 June 2020) 1 35 30 June 2020 1 35 Average for June 2020 1 37 31 July 2020 1 40 Additional information relating to New York Limited Sales are seasonal and do not occur evenly throughout the year 50 of total sales are generated in the first six months from July to December and the balance from January to June All expenses occur evenly throughout the year, except for closing inventory, which was purchased on 30 June 2020, and interest on the bank loan, which is paid semi annually (an amount of US$3,000) on 31 December and 30 June each year The dividend was paid on 30 September 2019 and the dividend declared on balance date and will be paid in July 2020 An additional item of equipment was purchased on 30 September 2019 for US$30,000 No other items of property, plant and equipment were purchased or sold during the year All plant and equipment are depreciated on a straight line basis at the rate of 20 p a Land was purchased on 31 December 2019 for US$67,500 Required The functional currency is considered to be Australian Dollars (AUD$) Prepare the translation of the 30 June 2020 financial statements of New York Limited (in US$) into Australian Dollars (AUD$) Round all numbers to the nearest whole number (10 marks) US$ Rate A$ Sales 285,000 Opening Inventory 45,000 Purchases 180,000 Closing Inventory (52,500) Cost of Goods Sold 172,500 Gross Profit 112,500 Depreciation 28,500 Interest 6,000 Other 37,500 Profit before tax 40,500 Income Tax Expense (12,150) Profit after Tax 28,350 Opening Retained Earnings 75,000 Dividend paid (9,750) Dividend declared (13,500) Closing Retained Earnings 80,100

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On 1 July 2019, an Australian company, Sydney Limited, acquired all the issued shares of a United States company, New York Limited, as it looks

On 1 July 2019, an Australian company, Sydney Limited, acquired all the issued shares of a United States company, New York Limited, as it looks to expand its operations into new overseas markets. The net assets of New York Limited on that date consisted of:

	US$
Share capital	180,000
General reserve	15,000
Retained earnings	75,000
Total equity	270,000

The relevant exchange rates for the period are as follows:

US$1 = A$

1 July 2019	1.52	Average for year 2019/2020	1.42
30 September 2019	1.48	Average (July 2019 December 19)	1.45
31 December 2019	1.42	Average (January 2020 June 2020)	1.35
30 June 2020	1.35	Average for June 2020	1.37
31 July 2020	1.40

Additional information relating to New York Limited:

Sales are seasonal and do not occur evenly throughout the year. 50% of total sales are generated in the first six months from July to December and the balance from January to June.

All expenses occur evenly throughout the year, except for closing inventory, which was purchased on 30 June 2020, and interest on the bank loan, which is paid semi-annually (an amount of US$3,000) on 31 December and 30 June each year.

The dividend was paid on 30 September 2019 and the dividend declared on balance date and will be paid in July 2020.

An additional item of equipment was purchased on 30 September 2019 for US$30,000. No other items of property, plant and equipment were purchased or sold during the year. All plant and equipment are depreciated on a straight-line basis at the rate of 20% p.a.

Land was purchased on 31 December 2019 for US$67,500.

Required:

The functional currency is considered to be Australian Dollars (AUD$). Prepare the translation of the 30 June 2020 financial statements of New York Limited (in US$) into Australian Dollars (AUD$). Round all numbers to the nearest whole number. (10 marks)

	US$	Rate	A$
Sales	285,000
Opening Inventory	45,000
Purchases	180,000
Closing Inventory	(52,500)
Cost of Goods Sold	172,500
Gross Profit	112,500
Depreciation	28,500
Interest	6,000
Other	37,500

Profit before tax	40,500
Income Tax Expense	(12,150)
Profit after Tax	28,350
Opening Retained Earnings	75,000
Dividend paid	(9,750)
Dividend declared	(13,500)
Closing Retained Earnings	80,100