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

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 $\quad \mathrm { NZ } \$ 1.00 = \mathrm { A } \$ 0.90$
-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

Quizplus · Accepted Answer

The Answer of 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

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 $\$ 1.00 = A \$ 1.00$