Maypole Pty Ltd is an Australian company which has a functional currency of Australian dollars.Appleflower Pty Ltd is a US company which is a wholly owned subsidiary of Maypole.Its functional currency is US dollars.To comply with AASB 121,Maypole must translate the financial statements of Appleflower into Australian dollars to report in the consolidated groups financial statements.
Appleflower has land which it acquired on 17 October 20X0 for US$ 500 000.The relevant exchange rates are as follows:
Spot rate at date of acquisition$\quad AUS 1 = US\$ 0.80$
Spot rate at 30 June 20X1$\quad AUS 1 = US\$ 0.85$
Average rate for the 20X1 financial year$\quad AUS 1 = US\$ 0.82$
The amount which should be recorded in the Maypole consolidated group for the land for the 20X1 financial year (assuming no fair value adjustments have occurred).is:

Question

Maypole Pty Ltd is an Australian company which has a functional currency of Australian dollars.Appleflower Pty Ltd is a US company which is a wholly owned subsidiary of Maypole.Its functional currency is US dollars.To comply with AASB 121,Maypole must translate the financial statements of Appleflower into Australian dollars to report in the consolidated groups financial statements.
Appleflower has land which it acquired on 17 October 20X0 for US$ 500 000.The relevant exchange rates are as follows:
Spot rate at date of acquisition$\quad AUS  1 =  US\$ 0.80$
Spot rate at 30 June 20X1$\quad AUS  1 =  US\$ 0.85$
Average rate for the 20X1 financial year$\quad AUS  1 =  US\$ 0.82$
The amount which should be recorded in the Maypole consolidated group for the land for the 20X1 financial year (assuming no fair value adjustments have occurred).is:

Quizplus · Accepted Answer

The land was acquired on 17 October 20X0, so the spot rate at that date should be used to translate the cost of the land into Australian dollars. The spot rate at 17 October 20X0 was AUS 1 = US$ 0.80, so the cost of the land in Australian dollars is US$ 500,000 x 0.80 = AU$ 400,000.

Maypole Pty Ltd Is an Australian Company Which Has a Functional