- Question 1 Yellow Berhad Manufactures Yogurt Drink Yellow Berhad Was Incorporated On 1 Janu 2019 And The Functional Cur 1 (46.23 KiB) Viewed 27 times
QUESTION 1 Yellow Berhad manufactures yogurt drink. Yellow Berhad was incorporated on 1 Janu 2019 and the functional currency is the Ringgit Malaysia (RM). The financial year en 31 December each year. Due to financial difficulties, Yellow Berhad applies for borrow from overseas bank. The application requires Yellow Berhad to prepare finan statements in A Dollar (A$), the currency of the overseas bank in the country it operate The followings are the financial statements prepared in its functional currency (RM) Yellow Berhad: Statement of profit or loss for the year ended 31 December 2020 RM Revenue 350 Cost of sales (100) Gross profit 250 Distribution costs (45) Administrative expenses (40) Profit before tax 165 Tax expense (50) Profit for the year 115 2019 RM 400 (125) 275 (40) (25) 210 (63) 147
Statement of financial position as at 31 December 2020 RM 2019 RM 420 75 150 247 892 435 125 100 100 760 Non-current assets Property, plant and equipment Inventory Trade and other receivable Cash Total assets Current liabilities Trade and other payables Tax payable Total liabilities Share capital Retained earnings 80 50 130 500 262 762 50 63 113 500 147 647 Total liabilities and equities 892 760
The following spot currency exchange rates apply: 1 January 2019 31 December 2019 31 December 2020 Average rate for 2019 Average rate for 2020 Opening inventory was bought 2019 Closing inventory was bought 2019 Opening inventory was bought 2020 Closing inventory was bought 2020 RM1: A$4.00 RM1: A$3.90 RM1: A$4.20 RM1: A$4.22 RM1: A$3.58 RM1: A$4.00 RM1: A$3.88 RM1: AS3.88 RM1: A$4.30 Opening net assets on 1 January 2019 is RM500. Required: In accordance with MFRS121: The Effects of Changes in Foreign Exchange Rates: a) Translate Yellow Berhad's 2019 and 2020 financial statements from the company's functional currency (RM) to the company's presentation currency (A$). Translated profit for the year (SOPL/2019 = $619 Translated profit for the year (SOFP)(2019)= $523 (15 marks) Translated profit for the year (SOPL)2020)= $412 Translated profit for the year (SOFP)2020)= $677 b) Prepare the reconciliation of exchange difference for the year 2019 and 2020. Year 2019= Exchange loss, 96 (10 marks) Year 2020=Exchange gain, 265