The Following Information Relates to Question
Aussie Ltd Acquired $\text { Statement of Financial Position as at } 1 \text { July } 20 \times 0$

question 7

Multiple Choice

The following information relates to question
Aussie Ltd acquired 100% of Sing Sing Ltd (Sing Sing) on 1 July 20X0. The statement of financial position of Sing Sing on that date was as follows:
$\text { Statement of Financial Position as at } 1 \text { July } 20 \times 0$
$\begin{array}{lrlr}&S\$&&S\$\\\text { Machinery at cost } & 280,000 & \text { Share capital } & 200,000 \\\text { Investment property } & 200,000 & \text { General Reserve } & 100,000 \\\text { Receivables } & 50,000 & \text { Retained earnings } & 300,000\\\text { Cash }&70,000\\&600,000&&600,000\end{array}$ The statement of financial position of Sing Sing as at 30 June 20X1was as follows:
Statement of Financial Position as at 30 June 20X1
$\begin{array}{lrlr}&S\$&&S\$\\\text { Machinery- carrying value } & 150,000 & \text { Share capital } & 200,000 \\\text { Investment property } & 200,000 & \text { General Reserve } & 100,000 \\\text { Trade receivables } & 250,000 & \text { Retained earnings } & 500,000 \\\text { Cash } & 300,000 & \text { Trade payables } & 85,000 \\& & \text { Income tax payable } & 15,000\\&900,000&&900,000\end{array}$
Relevant exchange rates are as follows:
$\begin{array}{llll}&A\$&&S\$\\1 \text { July } 20 \times 0 & 1.00 & = & 1.25 \\30 \text { June } 20 \times 1 & 1.00 & = & 1.28 \\\text { Average } 20 \times 0-\times 1 & 1.00 & = & 1.18\end{array}$
-If the functional currency of Sing Sing is Singapore dollars and the presentation currency is Australian dollars the total assets of S$900,000 would translate into Australian dollars as:

• A) $703 125
• B) $709 688
• C) $1 141 500
• D) $1 152 000

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Definitions:

Novation

The act of replacing an original party in a contract with a new party, with the consent of all involved, effectively creating a new contract.

Previous Valid Obligation

A duty or commitment that has been legally recognized and must be fulfilled as previously agreed or contracted.

Novation

The act of replacing an old obligation with a new one, thereby extinguishing the original obligation.

Consideration

In contract law, the benefit or value that each party agrees to give or receive as part of a legal agreement.