The Big Group has established a new subsidiary, Rotto Lad, in Bogoland where the unit of curreney is the Bogo. The new company was set up in 31 December 20X3 when its balance sheet was as follows: Bogos Exchange & Rate Share capital 1,000,000 shares of I Bogo 1.000.000 10 - 100.000 Fixed Assets at Cost 1.200.000 10 120.000 Cash 300,000 10 30,000 Less Long Term Loan (500.000) 1.000.000 10_150.000) 100.000 The company's Profit and Loss Account for the year ended 31 December 20X4 and its balance sheet at that date, both in Bogos are as follows: Fixed assets at cost Less Ace'd depreciation Stock Trade debtors Cash Trade creditors Bogos 1.500.000 Profit and lows account for the year eaded (150000) 31 December 20X4 Bogos Bogos 500,000 Sales 5,000,000 300,000 450,000 Opening stock (300000) Purchases 3.500.000 2.300,000 Les Closing stock 500000) 3.000.000 1,000,000 Gross profit 2.000.000 800.000 Depreciation (150,000) 500.000 Other expenses 01.050.000) 800.000 Share capital Retained earnings Long-term loan 2.300,000 Net profit The following information is relevant: (1) 31 December 2004 IE8 Bogos when Fixed Asset was purchased 1 = 9 Bogos Average for the year 1 = 9 Bogos when Closing Stock was purchased E-Bogos (2) Depreciation policy is 10% straight line method. There were no fixed asset disposals during the year. A full year of depreciation is provided in the year of addition REQUIRED a) Translate the financial statements of Rotto Ltd to 's sterling for the year ended 31 December 20X4 using (1) Temporal method and (2) the closing rate method. b) In (2) closing rate method, analyse the difference arising an exchange, and identify the treatment of exchange difference under IAS 21 when the closing rate method is used. The Big Group has established a new subsidiary, Rotto Ltd, in Bogoland where the unit of currency is the Bogo. The new company was set up in 31 December 20X3 when its balance sheet was as follows: Bogos Exchange Rate Share capital 1,000,000 shares of 1 Bogo 1.000.000 10 100.000 Fixed Assets at Cost 1.200.000 10 120,000 Cash 300,000 10 30,000 Less Long Term Loan (500.000 1.000.000 10_150,000) 100.000 The company's Profit and Loss Account for the year ended 31 December 20X4 and its balance sheet at that date, both in Bogos are as follows: Fixed assets at cost Less Acc'd depreciation Stock Trade debtors Cash Trade creditors Bogos 1,500,000 Profit and loss account for the year ended (150000) 31 December 20X4 Bogos Bogos 500,000 Sales 3,000,000 300,000 450,000 Opening stock (300000) Purchases 3.500.000 2.300.000 Less Closing stock (500000) 3.000.000 Share capital Retained carnings Long-term loan 1.000.000 800,000 500.000 2,300,000 Gross profit Depreciation Other expenses Net profit 2,000,000 (150,000) (1.050,000) 800.000 The following information is relevant: (1) 31 December 2004 1 = 8 Bogos when Fixed Asset was purchased 1 = 9 Bogos Average for the year 1 =9 Bogos when Closing Stock was purchased 1 -8Bogos (2) Depreciation policy is 10% straight line method. There were no fixed asset disposals during the year. A full year of depreciation is provided in the year of addition REQUIRED: a) Translate the financial statements of Rotto Ltd to 's sterling for the year ended 31 December 20X4 using (1) Temporal method and (2) the closing rate method. b) In (2) closing rate method, analyse the difference arising on exchange, and identify the treatment of exchange difference under IAS 21 when the closing rate method is used