Question

: FRS121- The Effect of Changes in Foreign Exchange Rates

On 1 January 2007, Ally Enterprise Sdn Bhd (AESB) acquired all the issued share capital of Jedi Ptd. Ltd (JPL) in Singapore. The subsidiary is wholly dependent on the parent for goods and the parent determines sales prices. The summarized financial statements of JPL are as follows:

Statement of Comprehensive Income for the year ended 31 December 2007

	$S’000	$S’000
Sales Revenue		2,850
Purchases	2,400
Closing Inventory	(400)	2,000
Gross Profit		850
Depreciation	100
Admin Costs	200
Rental	50	(350)
Net Profit		500

Statement of Financial Positions as at 31 December 2007

	$S’000	$S’000
Plant, Property & Equipment (net)		600
Current Assets
Inventory	400
Bank	200	600
Creditors		(400)
		800
Ordinary Shares at $S1 each		100
Retained profit		200
Net Profit		500
		800

The exchange rates are as follows:

Date when PPE were acquired by AESB                   RM1: $S0.45

1 January 2007                                                            RM1: $S0.44

31 December 2007                                                      RM1: $S0.46

Average rate for 2007                                                 RM1: $S0.45

Closing Stocks were bought at                                   RM1: $S0.43

You are required to:

i).      Translate the Statement of Comprehensive Income into the functional currency of the parent.

ii).     Translate the Statement of Financial Positions into the functional currency of the parent.

Answer 1