Ozzie Ltd Has Control Over Islander Ltd $\quad$ NZ $\$ 1.00 = A \$ 1.00$

question 5

Multiple Choice

Ozzie Ltd has control over Islander Ltd.The functional currency of Islander Ltd is the NZ$.On 31 May 20X1 Islander Ltd borrowed NZ$15 million.Ozzie Ltd uses the A$ as its presentation currency.The following spot rates applied.
On 31 May 20X1 $\quad$ NZ $\$ 1.00 = A \$ 1.00$
1 July 20X4 $\quad$ NZ $\$ 1.00 =$ AS0.95
30 June 20X5 $\quad \mathrm { NZ } \$ 1.00 = \mathrm { A } \$ 0.90$
-What is exchange difference on translation of the loan and how is it recognised in Ozzie's financial statements:

• A)$750 000 revenue included in period profit or loss
• B)$750 000 revenue recognised other comprehensive profit and accumulated in the reserve called the FCT reserve in chapter 24
• C)$750 000 expense recognised other comprehensive profit and accumulated in the reserve called the FCT reserve in chapter 24
• D)$1 500 000 revenue as other comprehensive profit and accumulated in the reserve called the FCT reserve in chapter 24

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