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on 1 January

question 21

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The following information relates to questions
On 1 January 20X3, Claudia Ltd, an Australian company, acquired 80% of the shares of Saskia Ltd, a New Zealand company, for A$2 498 000. At that date the share capital of Saskia was NZ$2 million and the retained earnings were NZ$1 440 000.

All the assets and liabilities of Saskia were recorded at fair value except for land, for which the fair value was NZ$200 000 higher than the carrying amount and equipment, for which the fair value was NZ$80 000 higher than the carrying amount. The undervalued equipment had a further 4-year life. The tax rate in New Zealand is 25%.

Exchange rates are as follows:
1 January 20X3 A$1.00=NZ$1.2031 December 20X3 A$1.00=NZ$1.40 Average for the year A$1.00=NZ$1.30\begin{array}{ll}1 \text { January 20X3 } & \mathrm{A} \$ 1.00=\mathrm{NZ} \$ 1.20 \\31 \text { December 20X3 } & \mathrm{A} \$ 1.00=\mathrm{NZ} \$ 1.40 \\\text { Average for the year } & \mathrm{A} \$ 1.00=\mathrm{NZ} \$ 1.30\end{array}
-The adjustment to the foreign currency translation reserve on 31 December 20X3 relating to the revaluation of the land if the functional currency of Saskia is New Zealand dollars is:


Definitions:

Rationalizations

The process of justifying behaviors, decisions, or beliefs with logical, plausible reasons, often to align with one’s self-concept or to avoid cognitive dissonance.

Unethical Behavior

Actions that fall outside the accepted moral norms and values of society, often leading to harm or disadvantage to others.

Ethical Problems

Moral dilemmas or situations where choosing between right and wrong is not straightforward, often involving conflicting principles.

Copyright Infringement

The unauthorized use of copyrighted material without permission, violating the rights of the copyright holder.

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