Part A

Austco Ltd, an Australian company, acquires all the issued shares of Forest Inc, a company operating in the United States, on 1 July 20X8 at a cost of $AUD 450 000.

Relevant exchange rates for the year to 30 June 20X9 are as follows:

Exchange rates 1$ US = 1$ AUD

1 July 20X8 1.70 Average rate for year 1.80 Average rate for the period April-June 1.95

Average rate for the period January - June 1.84

01 March 20X9 1.90 30 June 20X9 2.00

The income statement and the balance sheet of Forest Ltd for the year to 30 June 20X9 (i.e. one year after the date of acquisition) are shown below:

Income Statement For the year ended 30 June 20X9 $US $00

Sales revenue 1 000

Cost of sales

Opening inventory 200

Purchases 800 Ending inventory 180

Gross Profit 180

Expenses Administration expenses 10 Interest 20 Depreciation 40 Total expenses 70 Operating profit before tax 110

Income tax expense 50 Operating profit after tax 60

Retained Profits - 1 July 20X8 60

Total available for appropriation 120

Interim dividend paid 20 Retained Profits - 30 June 20X9 100

Balance Sheet As at 30 June 20X9

Share capital 200

Foreign Currency Translation Reserve Retained profits 100

Long term borrowings 400

Trade and other payables 160

860

Property, plant and equipment 380

Cash and cash equivalents 60

Trade receivables 240

Inventories 180

860

Additional Information:

The interim dividend was paid on the 01 March 20X9. Ending inventory represents inventory purchased in the April-June quarter of 20X9.

Property, Plant and Equipment was purchased 01 January 20X9.

Required

a. Translate the income statement and the balance sheet of Forest Inc for the financial period 30 June 20X9 in accordance with AASB 121