TRANSLATION OF FOREIGN OPERATIONS

QUESTION

On 1 July 2021, Corkie Ltd, an Australian company, acquired all the issued shares in Doogan Ltd, a company incorporated overseas. Exchange rates for the year ending 30 June 2022 are as follows:

1 July 2021	FC $1.00 = A$1.15
Average rate for the Year	FC $1.00 = A$1.17
Ending Inventory Acquired (before year end)	FC $1.00 = A$1.20
30 June 2022	FC$1.00 = A$1.22

The statement of profit and loss and other comprehensive income and statement of financial position for Doogan Ltd are provided as follows. The accounts are stated in FC (foreign currency) dollars which is Doogan Ltds functional currency.

Statement of Profit and Loss and Other Comprehensive Income

Doogan Ltd For the year ending 30 June 2022

	FC$
Sales	30 000 000
Less Cost of Goods Sold:
Inventory 1 July 2021	6 000 000
Add Purchases	24 000 000
Less Inventory 30 June 2022	-5 400 000
Cost of Goods Sold	24 600 000
Gross Profit	5 400 000
Less Expenses:
Administration	-900 000
Depreciation	-1 200 000
Net Profit Before Tax	3 300 000
Less Income Tax Expense	1 500 000
Net Profit after Tax	1 800 000
Other Comprehensive Income	-
Comprehensive Income	1 800 000

Doogan Ltd

Statement of Changes in Equity for the year ending 30 June 2022

	Share Capital FC$	Retained Earnings FC$
Balance as at 30 June 2021	6 000 000	1 800 000
From statement of profit and loss and other comprehensive income		1 800 000
Balance as at 30 June 2022	6 000 000	3 600 000

Statement of Financial Position for Doogan Ltd

As at 30 June 2022

	FC$
Share Capital and Reserves
Paid Up Capital	6 000 000
Retained Earnings	3 600 000
Total Equity	9 600 000
Current Liabilities
Trade Creditors	4 800 000
Non Current Liabilities
Bank Loan	12 000 000
Total Liabilities	16 800 000
Total Liabilities and Equity	26 400 000
Current Assets
Cash at Bank	1 200 000
Trade Debtors	8 400 000
Inventory	5 400 000
Non Current Assets
Plant and Equipment	11 400 000
Total Assets	26 400 000

Required1.

1. Prepare a translation of the statement of profit and loss and other comprehensive income of Doogan Ltd (functional currency) into the presentation currency of the group (Australian dollars). Round each calculation to the nearest whole dollar.

2. Prepare a translation of the statement of changes in equity of Doogan Ltd (functional currency) into the presentation currency of the group (Australian dollars). Round each calculation to the nearest whole dollar.

3. Provide the calculations to determine if the translation results in a foreign exchange gain or loss.

4. Prepare a translation of the statement of financial position from a functional currency into a presentation currency.