Entity A is a stand-alone entity (it is not part of a group). Its functional currency is CU. However, Entity A is required by law to present its financial statements in USD, which is the local currency of the country in which it operates. Entity A has a 31 December financial year-end.

The exchange rates:

On 31 December 20X1 and 31 December 20X2 are CU1 = USD2 and CU1 = USD2.2 respectively.

In 20X2 Entity A paid a dividend of CU3,000 when the rate of exchange was CU1 = USD2.25.

The share capital was issued when the exchange rate was CU1 = USD1.8.

Statement of comprehensive income for the year ended 31 December 20X2

20X2 CU

Revenue 146,114

Cost of sales (113,969)

Gross profit 32,145

Distribution costs (150)

Administrative expenses (9,000)

Other expenses (1,000)

Finance costs (3,000)

Profit before tax 18,995

Income tax expense (4,495)

Profit for the year 14,500

Extract from the statement of changes in equity

Retained earnings at the beginning of the year 18,000

Profit for the year 14,500

Dividends (3,000)

Retained earnings at end of year 29,500

Notes The weighted average exchange rate for the year ended 31 December 20X1 is CU1 = USD1.9.

Required:

i-Prepare a Translated Income Statement using USD currency showing the Translated Profit for the year. 

ii- If the Translation difference converting from CU TO USD IS 12,700, what is the Total Comprehensive Income for the year ended 20X2? 

Answer rating: 100% (QA)

iTranslated Income Statement For the year ended 31 December 2... View the full answer