Question 4: (15 Marks) KYP Ltd is an US based company with a functional currency of...

 

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Question 4: (15 Marks) KYP Ltd is an US based company with a functional currency of USS. The company entered into a number of transactions denominated in HKS during the year ended 30 June 2023. Required: If the closing exchange rate is US$1.00 = HK$7.70, determine the translated amount that will be included in the financial statements for each of the following transactions or events. [15 marks] 1. Land at cost of HK$600,0000 acquired on 1 February 2023 when the exchange rate is US$1.00 = HK$6.70. 2. Land revalued to HK$900,000 on 30 June 2023 that had cost HK$400,000 on 1 February 2023 when the exchange rate was US$1.00 = HK$6.70. 3. Credit sale of HK$240,000 on 12 March 2023 when the exchange rate is US$1.00 = HK$6.80. Received cash from debtor of HK$120,000 on 30 June 2023. 4. Credit purchase of inventories of HK$320,000 on 15 June 2023 when the exchange rate is US$1.00 = HK$6.20. The creditor remains unpaid at 30 June 2023. 5. A loan payable of HK$500,000 arranged on 1 January 2023 when the exchange rate is US$1.00 = HK$6.00. On 30 June 2023, the outstanding interest on the loan is HK$50,000. 6. A 6-month forward contract to buy HK$2,000,000 entered into on 1 April 2023 at the forward rate of US$1.00= HK$7.50. On 30 June 2023, the forward rate for a 3-month forward to buy HK$2,000,000 is US$1.00= HK$7.00. Assume a 3-month discount rate of 2% applies at 30 June 2023. Question 4: (15 Marks) KYP Ltd is an US based company with a functional currency of USS. The company entered into a number of transactions denominated in HKS during the year ended 30 June 2023. Required: If the closing exchange rate is US$1.00 = HK$7.70, determine the translated amount that will be included in the financial statements for each of the following transactions or events. [15 marks] 1. Land at cost of HK$600,0000 acquired on 1 February 2023 when the exchange rate is US$1.00 = HK$6.70. 2. Land revalued to HK$900,000 on 30 June 2023 that had cost HK$400,000 on 1 February 2023 when the exchange rate was US$1.00 = HK$6.70. 3. Credit sale of HK$240,000 on 12 March 2023 when the exchange rate is US$1.00 = HK$6.80. Received cash from debtor of HK$120,000 on 30 June 2023. 4. Credit purchase of inventories of HK$320,000 on 15 June 2023 when the exchange rate is US$1.00 = HK$6.20. The creditor remains unpaid at 30 June 2023. 5. A loan payable of HK$500,000 arranged on 1 January 2023 when the exchange rate is US$1.00 = HK$6.00. On 30 June 2023, the outstanding interest on the loan is HK$50,000. 6. A 6-month forward contract to buy HK$2,000,000 entered into on 1 April 2023 at the forward rate of US$1.00= HK$7.50. On 30 June 2023, the forward rate for a 3-month forward to buy HK$2,000,000 is US$1.00= HK$7.00. Assume a 3-month discount rate of 2% applies at 30 June 2023.

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