Your group has been engaged by Ace Ltd$,$ a Singapore$-$incorporated company, to provide recommendations relating to the acquisition of a foreign operation. Ace Ltd has the Singapore dollar $($S$$)$ as its functional and presentation currency.

The acquisitions team at Ace Ltd has identified two foreign companies that fit the company$$s requirements and would like your group$$s advice on which foreign company to acquire.

Blue Ltd has its headquarters in Country B and has the B Dollar $($B$$)$ as its presentation currency. Country B is a country in which Ace Ltd has been intending to enter to sell its products. Crown Ltd has its headquarters in Country C and has the C Dollar $($C$$)$ as its presentation currency. Country C is a country that produces some of the raw materials that Ace Ltd uses to manufacture its products.

Ace Ltd is intending to acquire $60\%($or $60,000$ out of $100,000)$ of the ordinary shares of one of the two foreign companies on $1$ January $2025$ to achieve control over the selected company. Ace Ltd does not have any other subsidiaries or associates.

Your group has collated the following projected information related to Blue Ltd:

$$ Based on the projected exchange rate of B$$1=$ S$$1\mathrm{.}35$ and Blue Ltd$$s projected market price per share of B$$6\mathrm{.}00$ on $1$ January $2025,$ Ace Ltd would have to pay S$$486,000$ for $60,000$ shares of Blue Ltd and record an $$investment in Blue Ltd$$ at cost of S$$486,000$ in its individual statement of financial position.

$$ Blue Ltd$$s fair value of identifiable net assets is equal to its book value represented by share capital of B$$100,000$ and retained earnings of B$$400,000$ on $1$ January $2025,$ except for an unrecognized brand with a market value of B$$50,000$ as at $1$ January $2025.$

$$ Blue Ltd$$s equipment was acquired on $1$ January $2021$ for B$$500,000.$ The equipment had $10$ years of useful life on its acquisition date.

$$ Blue Ltd would pay dividends of B$$200,000$ to its shareholders on $5$ December $2025.$

$$ Blue Ltd$$s sales, purchases, expenses, and the other items in the statement of profit of loss and other comprehensive income occurred evenly throughout the year.

Shown below are the projected individual financial statements of Blue Ltd and Crown Ltd for the year ended $31$ December $2025.$

$($vii$)$ Blue Ltd$$s and Crown Ltd$$s projected statements of profit or loss and other comprehensive income for the year ended $31$ December $2025.$

Blue Ltd Crown Ltd

B$$\text{'}000$ C$$\text{'}000$

Sales $1,2001,000$

Less cost of sales $(400)(300)$

Gross profit $800700$

Less operating expenses $(280)(250)$

Profit before tax $520450$

Less tax $(180)(170)$

Profit after tax $340280$

Other comprehensive income:

Revaluation surplus $40$

Total comprehensive income $340$

$320$

$($viii$)$ Blue Ltd$$s and Crown Ltd$$s projected statements of financial position as at $31$ December $2025$

Blue Ltd Crown Ltd

B$$\text{'}000$ C$$\text{'}000$

Land $210$

Equipment $500300$

Accumulated depreciation $(250)(120)$

Inventory $250190$

Accounts receivable $260170$

Cash $220180$

$980$

$930$

Share capital $100100$

Revaluation reserve $40$

Retained earnings $540480$

Other payables $150110$

Accounts payable $190200$

$980$

$930$

Assume the following additional information:

$$ The companies$$ and group$$s accounting policies are to carry land at the revalued amount and equipment at cost and to depreciate equipment using the straight$-$line method.

$$ The group$$s policy is to measure non$-$controlling interest based on its share of the acquisition$-$date fair value of identifiable net assets of the subsidiary.

$$ Assume that there are no deferred tax effects arising from consolidation.

$$ The relevant exchange rates between B$ and S$ were as follows:

$1$ January $2021$ B$$1=$ S$$1\mathrm{.}10$

$1$ January $2024$ B$$1=$ S$$1\mathrm{.}40$

Average rate for $2024$ B$$1=$ S$$1\mathrm{.}38$

$31$ December $2024($and $1$ January $2025)$ B$$1=$ S$$1\mathrm{.}35$

Average rate for $2025$ B$$1=$ S$$1\mathrm{.}33$

$5$ December $2025$ B$$1=$ S$$1\mathrm{.}30$

$31$ December $2025$ B$$1=$ S$$1\mathrm{.}32$

Assume that Ace Ltd acquired Blue Ltd on $1$ January $2025$ and had correctly identified Blue Ltd$$s functional currency to be the Singapore dollar $($S$$).$ Blue Ltd$$s presentation currency is still the B Dollar $($B$$).$

$($i$)$ Analyze the factors that may have led Ace Ltd to select the Singapore dollar to be the functional currency of Blue Ltd$.$ You may make any necessary assumptions to support your discussion.

$($ii$)$ Discuss the accounting implications for the Ace Ltd group of the Singapore dollar being the functional currency of Blue Ltd$.$ You may make any necessary assumptions to support your discussion.

Use SFRS$($I$)1-21$ Paragraph $9-11$ to answer the question.