Rudd Ltd,an Australian Entity Purchased Lee Ltd and Kew Ltd

question 29

Multiple Choice

Rudd Ltd,an Australian entity purchased Lee Ltd and Kew Ltd on 1 July 2012.Both entities are considered foreign operations of Rudd Ltd based in Singapore.The following information was extracted from the foreign operation's accounts for the period ended 30 June 2015: $$\begin{array} { | l | r | r | } \hline \text { In Singapore \$ } & \text { Lee Ltd } & \text { Kew Ltd } \\\hline \text { Equipment (purchased 1 July 2012, revalued 1 June 2014) } & 650000 & 200000 \\\hline \text { Debentures (issued 1 June 2014) } & 900000 & 500000 \\\hline \text { Inventory—asset (purchased last quarter 2015) } & 68000 & 50000 \\\hline \text { Depreciation expense-equipment } & 54000 & 25000 \\\hline \text { Share capital at acquisition of foreign operation } & 4000000 & 2000000 \\\hline \text { Sales revenue (earned evenly over the period) } & 850000 & 680000 \\\hline\end{array}$$ Exchange rate information is:
$$\begin{array} { | l | l |} \hline1 \text { July } 2012 & \$ S 1.00 = A \$ 1.0520 \\\hline \text { Average for year ended } 30 \text { June } 2015 & \$ S 1.00 = A \$ 1.0700 \\\hline 1 \text { June } 2014 & \$ S 1.00 = A \$ 1.0735 \\\hline \text { Second quarter } 2015 & \$ S 1.00 = A \$ 1.0600 \\\hline 30 \text { June } 2015 & \$ S 1.00 = A \$ 1.0690 \\\hline\end{array}$$ The translation from Singapore dollars to Australian dollars resulted to the following balances:
$$\begin{array} { | l | r | r | } \hline \text { In Singapore \$ } & \text { Lee Ltd } & \text { Kew Ltd } \\\hline \text { Equipment (purchased 1 July 2012, revalued 1 June 2014) } & 694850 & 214700 \\\hline \text { Debentures (issued 1 June 2014) } & 962100 & 962100 \\\hline \text { Inventory on hand(second quarter 2015) } & 72692 & 53000 \\\hline \text { Depreciation expense-equipment } & 57780 & 26838 \\\hline \text { Share capital at acquisition of foreign subsidiary } & 4208000 & 2104000 \\\hline \text { Sales revenue (earned evenly over the period) } & 909500 & 727600 \\\hline\end{array}$$ Which of the following translation processes were applied to Lee Ltd and Kew Ltd,respectively,for the year ended 30 June 2015?

• A) functional currency; presentation currency
• B) functional currency; functional currency
• C) presentation currency; functional currency
• D) presentation currency; presentation currency

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