Atticus Ltd, a Singapore company, whose functional currency is the Singapore dollar, purchased 100,000 shares of Scotts
Question:
Atticus Ltd, a Singapore company, whose functional currency is the Singapore dollar, purchased 100,000 shares of Scotts Corporation (a foreign company listed in country X whose currency is the LC) at a price of LC 2.80 per share when the spot exchange rate was LC 1 to S$1.28 on 1 October 20x4. Atticus Ltd classified the long term equity investment held for strategic purpose as FVOCI. On 31 December 20x4, Scotts declared a dividend of LC 0.10 per share to be paid on 1 March 20x5. The share price of Scotts Corporation on 31 December 20x4 was LC 3.00; the spot exchange rate was LC 1 = S$1.21. The exchange rate on 1 March 20x5 was LC 1 = S$1.205.
Atticus Ltd’s financial year-end is 31 December.
Required
Prepare journal entries pertaining to the investment in Scotts Corporation, the dividend declared by the company on 1 October 20x4 and 31 December 20x4, and the receipt of the dividend on 1 March 20x5 in accordance with IAS 21 and IFRS 9.
Step by Step Answer:
Advanced Financial Accounting An IFRS Standards Approach
ISBN: 9781285428765
4th Edition
Authors: Pearl Tan, Chu Yeong Lim, Ee Wen Kuah