Yarra Manufacturing Ltd Is an Australian Registered Entity That Has

question 41

Multiple Choice

Yarra Manufacturing Ltd is an Australian registered entity that has a branch in Singapore,Kew Ltd.Kew Ltd has a foreign operation in China.The foreign operation maintains its accounting records in Chinese Yuan.The functional currency of the Chinese operation is Singapore dollar.The presentation currency of Kew Ltd is Australian dollar. At reporting date,the translation of the financial statements of the Chinese foreign operation resulted to a loss of S$6 500 and the translation of the financial statements of Kew Ltd to its presentation currency resulted to a gain of A$4 500.
Which of the following results is consistent with AASB 121 with respect to Yarra Manufacturing Ltd?

• A) Loss of S$6 500 should be recognised in profit and loss.
• B) Loss of S$6 500 should be recognised in comprehensive income.
• C) Gain of A$4 500 should be recognised in profit and loss.
• D) Gain of A$4 500 should be recognised in comprehensive income.
• E) None of the given answers.

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Definitions:

Time Draft

A written order to pay a specified amount of money at a future date.

Debtor-Creditor Relationship

A financial relationship where one party (the debtor) owes a debt to another party (the creditor).

Drawee

The drawee is the party, usually a bank, required to pay the monetary amount stated on a draft or check upon its presentation.

Nonnegotiable

Unable to be bought, sold, exchanged, or transferred to another party.