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 Share capital 1,000,000 shares of 1 Bogo 1.000.000 10_100,000 Rate Fixed Assets at Cost 1.200,000 300,000 10 120,000 10 30,000 Cash Less Long Term Loan (500,000) 1.000.000 10_(50.000) 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: 500,000 Sales Cash Bogos Fixed assets at cost 1,500,000 Profit and loss account for the year ended Less Ace'd depreciation (150000) 31 December 20X4 Bogos Bogos Stock 5,000,000 Trade debtors 300,000 450,000 Opening stock Trade creditors (300000) Purchases 3,500,000 2.300.000 Less Closing stock 1500000) 3,000,000 Share capital Gross profit 1,000,000 2,000,000 Depreciation Retained earnings (150,000) 800,000 Long-term loan Other expenses (1,050,000) 500.000 2.300.000 Net profit 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