Part A A US-based company, Etoile Co. Ltd., has a major subsidiary located in France, Raymond Bar Co., which produces and sells goods to customers almost exclusively in EU member states. Transactions are affected primarily in euros, both for sales and, to a lesser extent, for raw material purchases. Required: a. Determine the functional currency for Etoile Co. Ltd. in this instance. b. Explain the three primary reasons/factors for determining the functional currency under IAS 21. Part B Unique Limited is a US subsidiary of ABC Limited, an Indian Company. As of December 31, 2019, Unique Limited purchased an equity investment of US$ 2,000, recorded as fair value through profit and loss (FVTPL) account financial assets, and the closing exchange rate was US$1=Rs. 39.44. ABC Limited has translated these assets by applying the spot exchange rate. FVTPL accounting financial assets were carried at Rs. 78,880. As of December 31, 2020, the exchange rate was US$1=Rs. 49.72. Meanwhile, the fair value of the FVTPL account financial assets has declined to US$1,000. a. Required: Calculate the fair value gain or loss on the FVTPL account financial assets. and determine where this gain or loss goes (P/L or OCI)? b. Calculate the translation gain or loss on the FVTPL account financial assets, and determine where this gain or loss goes (P/L or OCI)? Calculate the total difference between the translated value as of December 31, 2019, and that as of December 31, 2020. C. Part A A US-based company, Etoile Co. Ltd., has a major subsidiary located in France, Raymond Bar Co., which produces and sells goods to customers almost exclusively in EU member states. Transactions are affected primarily in euros, both for sales and, to a lesser extent, for raw material purchases. Required: a. Determine the functional currency for Etoile Co. Ltd. in this instance. b. Explain the three primary reasons/factors for determining the functional currency under IAS 21. Part B Unique Limited is a US subsidiary of ABC Limited, an Indian Company. As of December 31, 2019, Unique Limited purchased an equity investment of US$ 2,000, recorded as fair value through profit and loss (FVTPL) account financial assets, and the closing exchange rate was US$1=Rs. 39.44. ABC Limited has translated these assets by applying the spot exchange rate. FVTPL accounting financial assets were carried at Rs. 78,880. As of December 31, 2020, the exchange rate was US$1=Rs. 49.72. Meanwhile, the fair value of the FVTPL account financial assets has declined to US$1,000. a. Required: Calculate the fair value gain or loss on the FVTPL account financial assets. and determine where this gain or loss goes (P/L or OCI)? b. Calculate the translation gain or loss on the FVTPL account financial assets, and determine where this gain or loss goes (P/L or OCI)? Calculate the total difference between the translated value as of December 31, 2019, and that as of December 31, 2020. C
