![TUTORIAL 6
QUESTION 1
a) Gajus Berhad should recognize the loan according to rate of exchange. This is because the
loan is settled at a date that is different from the initial recognition and the rate of exchange
on the settlement date is different from the rate of exchange on the date of initial recognition.
b)
1 July 20X2 BN$1 = RM2.00
31 December 20X2 BN$1 = RM2.25
Initial Recognition of the purchase:
Date Content Debit
RM
Credit
RM
1 July 20X2 Bank (8,000,000 x 2)
Foreign Bank Loan
16,000,000
16,000,000
Journal Entry to recognize the exchange difference I as follows:
Date Content Debit
RM
Credit
RM
31 December 20X2 Loss on Exchange
[(8,000,000 x 2.25) – 16,000,000]
Foreign Bank Loan
2,000,000
2,000,000
c) Gaju Berhad must increase the foreign bank loan by credit the value amounted RM2,000,000
and debit the loss on exchange as the exchange rate increases make the company
unfavourable. There is a loss on exchange arising from the foreign currency transactions.](https://image.slidesharecdn.com/tutorialfa4-230109162112-f3d48b90/85/Tutorial-FA4-docx-1-320.jpg)
![QUESTION 2
a) 1 February 20X5 KWD 1 = RM 13.20
31 December 20X5 KWD 1 = RM 13.25
Initial Recognition of the purchase:
Date Content Debit
RM
Credit
RM
1 Feb 20X5 Building (7,000,000 x 13.20)
Foreign Bank Loan
92,400,000
94,400,000
Journal Entry to recognize the exchange difference I as follows:
Date Content Debit
RM
Credit
RM
31 December 20X2 Building
Gain in fair value exchange
[(7,000,000 x 13.25) – 92,400,000]
Depreciation
Accumulated Depreciation
(92,750,000 / 10)
350,000
9,275,000
350,000
9,275,000
b) The treatment of depreciation of the building is occurred in the end of the accounting period
of Darusan Bhd according to the initial recognition building value. However, an increase in
exchange rate rise the value of the asset which need to take into account when calculating
the depreciation. Hence, a gain in fair value is recognized before the calculation of
depreciation. Then, the building value is divided by 10 useful years in order to get depreciation
amount as shown in the journal entry above.](https://image.slidesharecdn.com/tutorialfa4-230109162112-f3d48b90/85/Tutorial-FA4-docx-2-320.jpg)
Tutorial FA4.docx
- 1. TUTORIAL 6 QUESTION 1 a) Gajus Berhad should recognize the loan according to rate of exchange. This is because the loan is settled at a date that is different from the initial recognition and the rate of exchange on the settlement date is different from the rate of exchange on the date of initial recognition. b) 1 July 20X2 BN$1 = RM2.00 31 December 20X2 BN$1 = RM2.25 Initial Recognition of the purchase: Date Content Debit RM Credit RM 1 July 20X2 Bank (8,000,000 x 2) Foreign Bank Loan 16,000,000 16,000,000 Journal Entry to recognize the exchange difference I as follows: Date Content Debit RM Credit RM 31 December 20X2 Loss on Exchange [(8,000,000 x 2.25) – 16,000,000] Foreign Bank Loan 2,000,000 2,000,000 c) Gaju Berhad must increase the foreign bank loan by credit the value amounted RM2,000,000 and debit the loss on exchange as the exchange rate increases make the company unfavourable. There is a loss on exchange arising from the foreign currency transactions.
- 2. QUESTION 2 a) 1 February 20X5 KWD 1 = RM 13.20 31 December 20X5 KWD 1 = RM 13.25 Initial Recognition of the purchase: Date Content Debit RM Credit RM 1 Feb 20X5 Building (7,000,000 x 13.20) Foreign Bank Loan 92,400,000 94,400,000 Journal Entry to recognize the exchange difference I as follows: Date Content Debit RM Credit RM 31 December 20X2 Building Gain in fair value exchange [(7,000,000 x 13.25) – 92,400,000] Depreciation Accumulated Depreciation (92,750,000 / 10) 350,000 9,275,000 350,000 9,275,000 b) The treatment of depreciation of the building is occurred in the end of the accounting period of Darusan Bhd according to the initial recognition building value. However, an increase in exchange rate rise the value of the asset which need to take into account when calculating the depreciation. Hence, a gain in fair value is recognized before the calculation of depreciation. Then, the building value is divided by 10 useful years in order to get depreciation amount as shown in the journal entry above.
- 3. QUESTION 3 BALKAN BHD Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 31 December 20X5 R$’000 Rate RM’000 Sales Cost of Sales Gross Profit Expenses Profit before Tax Tax Profit after Tax Movement in Retained Profit Retained profit brought forward Retained profit for the year Dividend Retained profit carried Forward 112,000 (78,000) 1.40 1.40 1.40 1.40 1.50 From P/L 1.50 156,800 (109,200) 34,000 (14,500) 47,600 (20,300) 19,500 (3,900) 27,300 (5,460) 15,600 21,840 8,500 15,600 (300) 12,750 21,840 (450) 23,800 34,140 BALKAN BHD Statement of Financial Position as at 31 December 20X5 R$’000 Rate RM’000 Assets Property, Plant and Equipment Inventory Trade Receivables Bank Equity and Liabilities Ordinary Shares Retained profit Long-Term Loan Trade Payables Dividend Payables 39,100 9,900 10,000 6,900 1.50 2.00 2.00 2.00 1.50 Balancing figure 2.00 2.00 2.00 58,650 19,800 20,000 13,800 65,900 112,250 10,000 23,800 15,000 33,050 33,800 11,000 20,800 300 48,050 22,000 41,600 600 65,900 112,250