On 1 July 2019, an Australian company Frankston Ltd acquired all the issued shares of Boston Ltd, a company incorporated in the United States (US). At this date Boston Ltd had the following account balances:

	US$
Bank loan	4 000
Plant and equipment	4 200
Cash and debtors	400
Inventory	2 000
Retained earnings	600

Other account balances for Boston Ltd at 30^th June 2020 are as follows:

	US$ Dr	US$ Cr
Share capital		2 000
Retained earnings		1 200
Bank loan		4 000
Accounts payable		1 600
Sales		10 000
Plant and equipment	3 800
Cash and debtors	3 200
Inventory	1 800
Purchases	8 000
Administration expense	300
Depreciation expense	400
Income tax expense	500

Exchange rates for the year ending 30 June 2020 are as follows:

1 July 2019	US$1 = A$1.50
30 June 2020	US$1 = A$1.70
Average for year	US$1 = A$1.60
Ending inventory acquired (before year-end)	US$1 = A$1.65

1. Prepare the Statement of profit or loss and other comprehensive income and the statement of financial position of the foreign operation at 30 June 2020, assuming that the US dollar is the functional currency of Boston Ltd and the Australian dollar is the presentation currency of the group.
2. Calculate the foreign currency translation reserve.

Answer rating: 100% (QA)

Boston Ltd Statement of Profit or Loss and other comprahancive income for the year ending 30 June ... View the full answer