Question 4 The functional currency of Co A is the Singapore dollar. Co A entered into United States dollar (US$) denominated transactions as shown below: Balances as at 1 January 2012 US$10,000,000 US$1,200,000 nce US$1,500,000 Equity investments, at fair value through profit or loss Long-term loan payable Principal Unamortized balance US$1,265,006 Years to maturity from 1 January 2012 Coupon interest payable 31 December Effective interest rate 6 years 4% per annum 3% per annum Date 1 Jan 2012 Transactions during 31 December 2012 Insurance paid for the period from 1 January 2012 to 31 December 2012. US$ 60,000 Co A acquired a subsidiary and issued shares to the vendors as consideration. As part of the sales agreement, the vendors agreed to make a refund to Co A if the subsidiary fails to meet a profit target on 30 June 2013. Fair value of own shares issued to vendors Refundable amount Likelihood of refund was 50%. Ignore time value of money. 2,500,000 1,000,000 31 July 2012 Co A sold all of its equity investments held at fair value through profit or loss. Sales proceeds (at fair value) 8,000,000 Collection terms: 30% cash and 70% on credit to be settled on 2 January 2013. Ignore time value of money. Purchased an intangible asset with cash. 3,200,000 The intangible asset had an indefinite useful life. Co A adopted the cost model to measure its intangible assets. 31 Aug 2012 29 Nov 2012 120,000 31 Dec 2012 Dividends declared Co A paid the dividends on 15 January 2013. Recoverable amount of intangible asset As a result of new events, the likelihood of the contingent refund increased to 70%. Ignore time value of money. 2,300,000 Exchange rates are as follows: 1-Jan-12 31-Jul-12 31-Aug-12 29-Nov-12 31-Dec-12 Average for 2012 S$ to US$1 1.27 1.34 1.35 1.36 1.40 1.33 Required Prepare journal entries with brief headers for Co A for the year ending 31 December 2012, applying the most appropriate rate or its nearest equivalent to record the: i. effects of the above transactions in Singapore dollars; and ii. exchange gains and losses on individual monetary assets and liabilities Ignore tax effects. Question 4 The functional currency of Co A is the Singapore dollar. Co A entered into United States dollar (US$) denominated transactions as shown below: Balances as at 1 January 2012 US$10,000,000 US$1,200,000 nce US$1,500,000 Equity investments, at fair value through profit or loss Long-term loan payable Principal Unamortized balance US$1,265,006 Years to maturity from 1 January 2012 Coupon interest payable 31 December Effective interest rate 6 years 4% per annum 3% per annum Date 1 Jan 2012 Transactions during 31 December 2012 Insurance paid for the period from 1 January 2012 to 31 December 2012. US$ 60,000 Co A acquired a subsidiary and issued shares to the vendors as consideration. As part of the sales agreement, the vendors agreed to make a refund to Co A if the subsidiary fails to meet a profit target on 30 June 2013. Fair value of own shares issued to vendors Refundable amount Likelihood of refund was 50%. Ignore time value of money. 2,500,000 1,000,000 31 July 2012 Co A sold all of its equity investments held at fair value through profit or loss. Sales proceeds (at fair value) 8,000,000 Collection terms: 30% cash and 70% on credit to be settled on 2 January 2013. Ignore time value of money. Purchased an intangible asset with cash. 3,200,000 The intangible asset had an indefinite useful life. Co A adopted the cost model to measure its intangible assets. 31 Aug 2012 29 Nov 2012 120,000 31 Dec 2012 Dividends declared Co A paid the dividends on 15 January 2013. Recoverable amount of intangible asset As a result of new events, the likelihood of the contingent refund increased to 70%. Ignore time value of money. 2,300,000 Exchange rates are as follows: 1-Jan-12 31-Jul-12 31-Aug-12 29-Nov-12 31-Dec-12 Average for 2012 S$ to US$1 1.27 1.34 1.35 1.36 1.40 1.33 Required Prepare journal entries with brief headers for Co A for the year ending 31 December 2012, applying the most appropriate rate or its nearest equivalent to record the: i. effects of the above transactions in Singapore dollars; and ii. exchange gains and losses on individual monetary assets and liabilities Ignore tax effects
