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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Definitions:

Anaphylactic

A severe and rapid multisystem allergic reaction.

Chemical Substance

A form of matter with constant chemical composition and characteristic properties, distinct from mixtures or mechanical blends.

Chemical Burn

Tissue damage caused by contact with chemicals, leading to irritation or destruction of the skin.

Acids

Chemical substances that release hydrogen ions in water and have a pH less than 7, often characterized by a sour taste and the capability to turn litmus paper red.