Aus Ltd Has Control Over Hong Ltd $\quad$ $\quad$ HK$100 =

question 17

Multiple Choice

Aus Ltd has control over Hong Ltd.The functional currency of Hong Ltd is HK$, its domestic currency.On 28 February 20X4 Hong Ltd purchased a building for HK$8 million.Aus Ltd uses its domestic currency, the A$, as its presentation currency.
The relevant spot rates are:
28 February 20X4 $\quad$$\quad$ HK$1.00 = $\quad$ A$0.22
1 July 20X6 $\quad$$\quad$$\quad$$\quad$ HK$1.00 = $\quad$ AS0.20
30 June 20X7 $\quad$$\quad$$\quad$ HK$1.00 = $\quad$ A$0.17
-What is the exchange difference recognised in the reporting period ending 30 June 20X7 on translation of the building's carrying amount and how is it recognised?

• A)$240 000 expense included in period profit or loss
• B)$400 000 expense included in period profit or loss
• C)$400 000 expense recognised as other comprehensive profit and accumulated in the reserve called the FCT reserve in chapter 24
• D)$240 000 expense recognised as other comprehensive profit and accumulated in the reserve called the FCT reserve in chapter 24

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