IBT-PROBLEMS-02
ADVANCED FINANCIAL ACCOUNTING AND REPORTING
FOREIGN CURRENCY TRANSACTIONS
Buying and selling rates
Use the following information for the next two questions:
ABC Co. had the following foreign currency transactions on April 1, 2024:
Purchased goods worth CHF 40,000 (francs) from Swiss Company, a company based in Switzerland.
Sold goods with sale price of VEB 4,000 (bolivars) to Venezuelan Company, a company based in
Venezuela.
Both the transactions were settled on April 30, 2024. The following were the spot exchange rates:
Buying Selling
Swiss Francs
April 1, 2024…………………………₱44:CHF1 ₱48: CHF1
April 30, 2024……………………….₱47:CHF1 ₱50: CHF1
Bolivars
April 1, 2024…………………………₱10:CHF1 ₱12: CHF1
April 30, 2024……………………….₱13:CHF1 ₱16: CHF1
26. How much is the FOREX gain (loss) on the purchase transaction?
a. (120,000) b. 120,000 c. 80,000 d. (80,000)
27. How much is the FOREX gain (loss) on the sale transaction?
a. 16,000 b. 12,000 c. (16,000) d. (12,000)
Revaluation of asset
28. On January 1, 2024, ABC Co. acquired equipment for MWK 4,000,000 (kwachas) from a company
based in Malawi. The equipment’s estimated useful life is 4 years. ABC Co. uses the straight line method
of depreciation and the revaluation model.
On December 31, 2024, the equipment was determined to have a net appraised value of MWK 4,800,000
(kwachas). The relevant rates are as follows:
Jan. 1, 2024…………………………………………..₱0.20 : MWK 1
Dec. 31, 2024………………………………………..₱0.26 : MWK 1
How much is the revaluation surplus?
a. 648,000 b. 3,461,538 c. 448,000 d. None
Exchange difference recognized in OCI
29. ABC Co. has a wholly-owned subsidiary in Indonesia. The following information is available about the
subsidiary for the year to December 31, 2024:
(IDR -
Rupiahs)
Net assets, Jan. 1, 2024 400,000,000
Profit for the year 160,000,000
Dividends -
Net assets, Dec. 31, 2024 560,000,000
No goodwill arose from the business combination. The following are the relevant exchange rates:
Jan. 1, 2024……………………………………….. ₱0.003 : IDR 1
Average for the year……………………. ₱0.004 : IDR 1
Dec. 31, 2024……………………………. ₱0.005 : IDR 1
How much is the total gain (loss) on translation for the year?
a. 1,280,000 b. (1,120,000) c. 1,120,000 d. 960,000
Goodwill
Use the following information for the next two questions:
On January 1, 2024, a Philippine holding company acquired 100% interest in a subsidiary based in Kenya for
KES 40M (shillings). The fair value of the net assets of the subsidiary at that date was KES 32 million
(shillings).
The following are the relevant exchange rates:
Jan. 1, 2024……………………………………….₱0.04 : KES 1
Dec. 31, 2024………………………………………₱0.05 : KES 1
The group determined that there is no impairment in goodwill
30. How much is the goodwill as of January 1, 2024?
a. 100,000 b. 240,000 c. 320,000 d. 480,000
31. How much is the goodwill as of December 31, 2024?
a. 400,000 b. 440,000 c. 480,000 d. 560,000
Translation of a subsidiary’s financial statements
Use the following information for the next nine questions:
ABC Co. owns 80% of the ordinary shares of a foreign subsidiary, XYZ, Inc., a company based in Korea. XYZ,
Inc.'s functional currency is won. The subsidiary was acquired at the start of the reporting period for
6,000,000 wons, when the subsidiary's retained earnings were 3,200,000 wons.
At the date of the acquisition the fair value of the net assets of the subsidiary were 5,600,000 wons. This
included a fair value adjustment in respect of land.
ABC Co. elected to measure non-controlling interest at the NCI’s proportionate share of the fair value of the
subsidiary‘s net assets. The group determined at year-end that goodwill is not impaired. There were no
changes in the share capital of the subsidiary during the year.
The relevant exchange rates are as follows:
Date Exchange rates
Jan. 1, 2024………………………………….₱0.03: KRW 1
Average for the year………………₱0.04: KRW 1
Dec. 31, 2024……………………………….₱0.05: KRW 1
A summary of the individual financial statements of the entities at the end of reporting period are shown
below:
Statements of financial position
As at December 31, 2024
ABC Co. XYZ, Inc.
ASSETS (pesos) (wons)
Investment in subsidiary 180,000
Other assets 8,000,000 5,200,000
TOTAL ASSETS 8,180,000 5,200,000
LIABILITIES AND EQUITY
Liabilities 1,600,000 240,000
Share capital 4,000,000 800,000
Retained earnings 2,580,000 4,160,000
Total equity 6,580,000 4,960,000
TOTAL LIABILITIES AND EQUITY 8,180,000 5,200,000
Statements of profit or loss
For the year ended December 31, 2024
ABC Co. XYZ, Inc.
(pesos) (wons)
Revenues 3,600,000 2,400,000
Expenses (2,160,000) (1,440,000)
Profit for the year 1,440,000 960,000
32. How much is the goodwill as of December 31, 2024?
a. 45,600 b. 76,000 c. 66,500 d. 64,500
33. How much is the non-controlling interest in the net assets of the subsidiary (NCI) as of December
31, 2024?
a. 39,360 b. 56,600 c. 54,360 d. 65,600
34. How much is the consolidated retained earnings as of December 31, 2024?
a. 2,618,400 b. 2,702,400 c. 2,672,340 d. 2,610,720
35. How much is the total translation gain (loss) to be recognized in other comprehensive income in
2024?
a. 152,000 b. 121,600 c. 161,600 d. 136,000
36. How much is the consolidated profit in 2024?
a. 1,478,400 b. 1,488,000 c. 1,596,400 d. 1,696,000
37. How much is the consolidated total comprehensive income in 2024?
a. 1,640,000 b. 1,630,400 c. 1,718,000 d. 1,832,000
38. How much is the comprehensive income attributable to owners of the parent?
a. 1,592,320 b. 1,606,080 c. 1,598,400 d. 1,638,080
39. How much is the consolidated total assets as of December 31, 2024?
a. 8,416,000 b. 9,680,000 c. 8,340,000 d. 9,860,000
40. How much is the equity attributable to owners of the parent as of December 31, 2024?
a. 6,676,320 b. 6,828,320 c. 6,738,400 d. 6,804,000
