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 $\quad \mathrm { NZ } \$ 1.00 = \mathrm { A } \$ 0.90$
-At what amount will the loan be reported in Ozzie's consolidated financial statements for the reporting period ending 30 June 20X5?
A)$15 000 000
B)$14 250 000
C)$15 789 474
D)$13 500 000

Question

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 $\quad \mathrm { NZ } \$ 1.00 = \mathrm { A } \$ 0.90$
-At what amount will the loan be reported in Ozzie's consolidated financial statements for the reporting period ending 30 June 20X5?
A)$15 000 000
B)$14 250 000
C)$15 789 474
D)$13 500 000

Quizplus · Accepted Answer

The loan will be reported at the current exchange rate on 30 June 20X5, which is NZ$1.00 = A$0.90. Therefore, NZ$15 million will be converted to A$13.5 million (15,000,000 * 0.90).

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

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