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    2022 FE Question

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    joehe2625

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    2022 FE Question

    Uploaded by

    joehe2625
    10 views2 pages

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    10 views2 pages

    2022 FE Question

    Uploaded by

    joehe2625

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    You are on page 1of 2

    SECTION A: FOREIGN CURRENCY

    Scenario Information
    You are the financial accountant at Kiwiana International Ltd (KIL), a New Zealand listed
    company. On 1 January 2021, KIL acquired all the issued shares of Singapore Ltd (SL), located
    in Singapore. The CFO of KIL, Jenny Zhang, asked you to prepare the translated financial
    statements of SL. SL prepares its financial statements using its local currency, the Singaporean
    dollar (S$).

    SL balance sheet on 1 January 2021 is as follows:

    S$ 000
    Share Capital 17,000
    Retained Earnings 3,000
    Accounts Payable 6,000
    Total Liabilities and Equity 26,000

    Equipment (net) 18,000


    Inventory 1,000
    Cash and accounts receivable 7,000
    Total Assets 26,000

    The financial statements of SL as at 31 December 2021, the fiscal year end, as well as the
    relevant exchange rates are provided in the Excel spreadsheet template file for this
    examination paper.

    Additional information:
    • Dividends were declared and paid on 1 October 2021.
    • The opening inventory was on hand at the time of the acquisition of SL. The closing
    inventory was acquired on 15 December 2021.
    • All the equipment (net) account relates to equipment that was on hand at the time of the
    acquisition.
    • The building was acquired on 15 October 2021.
    • On 1 December, KIL contributed additional capital to SL of S$3 million.
    • Sales, purchases, and other expenses were incurred evenly throughout 2021.

    Question 1
    Refer to the scenario information in Section A and answer Question 1 in the Excel spreadsheet
    template file provided.

    Required:
    Using the Excel spreadsheet template file provided, translate the SL financial statements for
    the year ended 31 December 2021 into New Zealand dollars (NZ$), assuming:
    a. The NZ dollar is the functional currency of SL. (8 marks)
    b. The Singaporean dollar is the functional currency of SL. (8 marks)

    IN CONFIDENCE
    1. NZ dollar is the Functional 2. The Singaporean dollar is the
    Local Currency
    Currency Functional Currency
    Exchange Exchange
    Income statement for 2021 $S $NZ $NZ
    rate rate
    Sales revenue 7,000,000
    Opening Inventory 1,000,000
    Purchases 4,000,000
    Ending inventory -500,000
    Cost of Goods Sold 4,500,000
    Gross Profit 2,500,000
    Depreciation- equipment -150,000
    Depreciation- building -55,000
    Other expenses -400,000
    Tax -1,000,000
    -/+ foreign exchange gain/loss
    (if applicable)
    Net Profit 895,000
    Retained Earnings 1/1/21 3,000,000
    Dividends -500,000
    Retained Earnings 31/12/21 3,395,000

    Balance Sheet as at 31 December 2021


    Contributed Capital 17,000,000
    Additional contributed capital 3,000,000
    Retained Earnings 3,395,000
    Foreign Currency Translation
    Reserve (if applicable)
    Accounts Payable 2,000,000
    Total Liabilities and Equity 25,395,000

    Equipment (net) 17,850,000


    Building (net) 4,055,000
    Inventory 500,000
    Cash and accounts receivable 2,990,000
    Total Assets 25,395,000

    Relevant exchange rates were as follows:


    1 January 2021: S$1.00 = NZ$ 1.10
    1 October 2021: S$1.00 = NZ$ 1.14
    15 October 2021: S$1.00=NZ$ 1.16
    1 December 2021 S$1.00= NZ$ 1.17
    15 December 2021: S$1.00 = NZ$ 1.18
    31 December 2021: S$1.00 = NZ$ 1.20
    Average 2021: S$1.00 = NZ$ 1.15

    IN CONFIDENCE

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