ACC394 202360 Question 3 file
Translation into presentation currency
Adams Ltd is an international company resident in Australia. It acquired the issued shares of a British company, Stripes Ltd, on 1 July 2022 for A$550 000.
At 30 June 2023, the following information was available about the British company:
Stripes Limited
Financial Statements for Transalation
Sales		546,000
Dividend revenue		567
Total revenue		546,567
Cost of sales		-246,000
Gross profit		300,567
Operating expenses
Depreciation		-37,500
Wages		-125,750
Other expenses		-18,000
Total expenses		-181,250
Profit before tax		119,317
Tax expense		-9,000
Profit after tax		110,317
Retained earnings 1/7/2022		123,600
Dividend paid		-12,600
Dividend declared		-24,000
Retained earnings 30/6/2023		197,317
Assets
Current assets
Cash		22,117
Accounts receivable		69,000
Inventory		48,000
Current assets		139,117
Non-current assets
Buildings	513,000
Accumulated depreciation - building	-171,000	342,000
Plant	300,000
Accumulated depreciation - plant	-75,000	225,000
Non-current assets		567,000
Total assets		706,117
Liabilities
Current liabilities
Provisions		21,000
Payables		25,200
Other liabilities		9,600
		55,800
Non-current liabilities
Loans		126,000
Total liabilities		181,800
Net assets		524,317
Share capital		327,000
Foreign currency translation reserve
Retained earnings as at 30/6/2023		197,317
Total equity		524,317
Additional information
1. Sales, purchases and other expenses were incurred evenly throughout the 2022-2023 period. The dividend was paid by Brisbane Ltd on 1 January 2022, while the dividend was declared on 30 June 2023.
2. Stripes Ltd acquired US$100 000 additional new plant on 1 January 2023. Of the depreciation charged in the 2022-23 period, USD $8000 related to the new plant.
3.The rates of exchange between the Australian dollar and the US dollar were (expressed as AUD$1 GBP 0.6):
1-Jul-22	AUD$1 =	GBP	0.48
31-Dec-22	AUD$1 =	GBP	0.56
1-Jan-23	AUD$1 =	GBP	0.54
30-Jun-23	AUD$1 =	GBP	0.58
Average for the 2022-23 period	AUD$1 =	GBP	0.53
4. The functional currency of Brisbane Ltd is the Australian dollar.
Required
1. Translate the financial statements of Stripes Ltd into Australian dollars for inclusion in the consolidated financial statements of Adams Ltd.
2. Verify the translation adjustment.

Answer rating: 100% (QA)

1 Translation of Stripes Ltd financial statements into Australian dollars Income Statement for the y... View the full answer