Weelow Limited set up a French Subsidiary in France some years ago. You have been asked to translate the results of French subsidiary in preparation to consolidate the results into the New Zealand parent company. You have been provided with the Income Statement and Balance Sheet for French Subsidiary in Euro: French Subsidiary Income Statement for the year ended 31 December 2020 Euro Euro Sales 845,000 Opening Inventory 155,000 Purchases 403,000 Closing Inventory (130,000) Cost of Sales (428,000) Gross Profit 417,000 Selling & Administration Expenses (208,000) Depreciation expense (91,000) Gain on Sale of Land 350,000 Net Profit Before Tax 468,000 Income tax expense (104,000) Net Profit After Tax 364,000 Opening Retained Earnings 450,000 Dividends (51,000) Closing Retained Earnings 763,000 Euro French Subsidiary Balance Sheet as at 31 December 2020 Assets Cash Accounts receivable Inventory Total Current Assets Plant & Equipment - Cost Plant & Equipment - Accumulated Depreciation Pland & Equipment - Net Land 360,000 260,000 130,000 750,000 650,000 -182,000 468,000 400,000 868,000 1,618,000 Total Non-current Assets Total Assets Liabilities 105,000 Accounts payable Total Liabilities 105,000 Equity =A-L Share capital Retained earnings Total equity 1,513,000 750,000 763,000 1,513,000 Other information: No additional shares have been issued since French Subsidiary was established. Income Tax was incurred evenly through the year. Selling and Administration ACG Wire Ansigastenly through the year. 4 - Questions The Land was purchased when French Subsidiary was established. During the current year French Subsidiary sold a spare parcel of Land for Euro 800,000. The original price paid for this land was Euro 450,000 and the Gain on Sale of Land was Euro 350,000. Relevant exchange rates are as follows: Relevant Exchange Rates NZ$1 = Euro 0.58 0.60 0.61 When Capital was contributed (subsidiary was established) and Land was purchased. When Plant and Equipment was purchased When Opening Inventory was purchased At the start of the year When parcel of Land was sold Average rate for the year When Closing Inventory was purchased When Dividends were paid At the end of the year 0.62 0.63 0.65 0.65 0.68 0.70 REQUIRED: (a) Assuming that the functional currency of French Subsidiary is Euro and the group presentation currency is the New Zealand dollar (NZ$), the financial statements will be translated using the method described at and around paragraph 39 of NZ IAS 21. This method is sometimes called the presentation currency method or the closing rate method. The opening balance for Retained Earnings in NZ$ is $700,000 on 1 January 2020 when using the paragraph 39 method. Using Worksheet 1 on pages 6 and 7, translate the financial statements pafe Frengh Subsidiary for the year ending 31 December 2020. (10 marks) (b) Using Para 39 method, calculate the NZ$ opening balance of the Foreign Currency Translation Reserve (FCTR) at 1 January 2020? ACCTG311 Assignment 4 QUEST - Questions (5 ION 3 marks) (c) Perform a reconciliation between the opening balance and closing balance of the foreign currency_translation reserve (FCTR) as at 31 December 2020 under paragraph 39 method. (5 marks) (d) Now assume that the functional currency of French Subsidiary is the New Zealand dollar. In this case, the financial statements of French Subsidiary for the year ending 31 December 2020 will be translated using the method prescribed at and around paragraph 23 of NZ IAS 21. This method is sometimes called the functional currency method or the temporal method. Calculate the opening balance of the Retained Earnings of French Subsidiary in $NZ on 1 January 2020 using para 23 method. (5 marks) (e) Using Worksheet 2 on pages 8 and 9, translate the financial statements for French Subsidiary for the year ended 31 December 2020 using paragraph 23 of NZ IAS 21. (10 marks) (f) Perform a reconciliation of the foreign currency translation gain/(loss) (paragraph 23 method) for the year ended 31 December 2020. (5 marks) (Tolag lnaf ) Worksheet 1 Para 39 Ex Rate NZS French Subsidiary Income Statement for the year ending 31 December Weelow Limited set up a French Subsidiary in France some years ago. You have been asked to translate the results of French subsidiary in preparation to consolidate the results into the New Zealand parent company. You have been provided with the Income Statement and Balance Sheet for French Subsidiary in Euro: French Subsidiary Income Statement for the year ended 31 December 2020 Euro Euro Sales 845,000 Opening Inventory 155,000 Purchases 403,000 Closing Inventory (130,000) Cost of Sales (428,000) Gross Profit 417,000 Selling & Administration Expenses (208,000) Depreciation expense (91,000) Gain on Sale of Land 350,000 Net Profit Before Tax 468,000 Income tax expense (104,000) Net Profit After Tax 364,000 Opening Retained Earnings 450,000 Dividends (51,000) Closing Retained Earnings 763,000 Euro French Subsidiary Balance Sheet as at 31 December 2020 Assets Cash Accounts receivable Inventory Total Current Assets Plant & Equipment - Cost Plant & Equipment - Accumulated Depreciation Pland & Equipment - Net Land 360,000 260,000 130,000 750,000 650,000 -182,000 468,000 400,000 868,000 1,618,000 Total Non-current Assets Total Assets Liabilities 105,000 Accounts payable Total Liabilities 105,000 Equity =A-L Share capital Retained earnings Total equity 1,513,000 750,000 763,000 1,513,000 Other information: No additional shares have been issued since French Subsidiary was established. Income Tax was incurred evenly through the year. Selling and Administration ACG Wire Ansigastenly through the year. 4 - Questions The Land was purchased when French Subsidiary was established. During the current year French Subsidiary sold a spare parcel of Land for Euro 800,000. The original price paid for this land was Euro 450,000 and the Gain on Sale of Land was Euro 350,000. Relevant exchange rates are as follows: Relevant Exchange Rates NZ$1 = Euro 0.58 0.60 0.61 When Capital was contributed (subsidiary was established) and Land was purchased. When Plant and Equipment was purchased When Opening Inventory was purchased At the start of the year When parcel of Land was sold Average rate for the year When Closing Inventory was purchased When Dividends were paid At the end of the year 0.62 0.63 0.65 0.65 0.68 0.70 REQUIRED: (a) Assuming that the functional currency of French Subsidiary is Euro and the group presentation currency is the New Zealand dollar (NZ$), the financial statements will be translated using the method described at and around paragraph 39 of NZ IAS 21. This method is sometimes called the presentation currency method or the closing rate method. The opening balance for Retained Earnings in NZ$ is $700,000 on 1 January 2020 when using the paragraph 39 method. Using Worksheet 1 on pages 6 and 7, translate the financial statements pafe Frengh Subsidiary for the year ending 31 December 2020. (10 marks) (b) Using Para 39 method, calculate the NZ$ opening balance of the Foreign Currency Translation Reserve (FCTR) at 1 January 2020? ACCTG311 Assignment 4 QUEST - Questions (5 ION 3 marks) (c) Perform a reconciliation between the opening balance and closing balance of the foreign currency_translation reserve (FCTR) as at 31 December 2020 under paragraph 39 method. (5 marks) (d) Now assume that the functional currency of French Subsidiary is the New Zealand dollar. In this case, the financial statements of French Subsidiary for the year ending 31 December 2020 will be translated using the method prescribed at and around paragraph 23 of NZ IAS 21. This method is sometimes called the functional currency method or the temporal method. Calculate the opening balance of the Retained Earnings of French Subsidiary in $NZ on 1 January 2020 using para 23 method. (5 marks) (e) Using Worksheet 2 on pages 8 and 9, translate the financial statements for French Subsidiary for the year ended 31 December 2020 using paragraph 23 of NZ IAS 21. (10 marks) (f) Perform a reconciliation of the foreign currency translation gain/(loss) (paragraph 23 method) for the year ended 31 December 2020. (5 marks) (Tolag lnaf ) Worksheet 1 Para 39 Ex Rate NZS French Subsidiary Income Statement for the year ending 31 December