SECTION A: FOREIGN CURRENCY

Scenario Information
You are the financial accountant at Kiwiana International Ltd (KIL), a New Zealand listed
company. On 1 January 2021, KIL acquired all the issued shares of Singapore Ltd (SL), located
in Singapore. The CFO of KIL, Jenny Zhang, asked you to prepare the translated financial
statements of SL. SL prepares its financial statements using its local currency, the Singaporean
dollar (S$).

SL balance sheet on 1 January 2021 is as follows:

S$ 000
Share Capital 17,000
Retained Earnings 3,000
Accounts Payable 6,000
Total Liabilities and Equity 26,000

Equipment (net) 18,000

Inventory 1,000
Cash and accounts receivable 7,000
Total Assets 26,000

The financial statements of SL as at 31 December 2021, the fiscal year end, as well as the
relevant exchange rates are provided in the Excel spreadsheet template file for this
examination paper.

Additional information:
• Dividends were declared and paid on 1 October 2021.
• The opening inventory was on hand at the time of the acquisition of SL. The closing
inventory was acquired on 15 December 2021.
• All the equipment (net) account relates to equipment that was on hand at the time of the
acquisition.
• The building was acquired on 15 October 2021.
• On 1 December, KIL contributed additional capital to SL of S$3 million.
• Sales, purchases, and other expenses were incurred evenly throughout 2021.

Question 1
Refer to the scenario information in Section A and answer Question 1 in the Excel spreadsheet
template file provided.

Required:
Using the Excel spreadsheet template file provided, translate the SL financial statements for
the year ended 31 December 2021 into New Zealand dollars (NZ$), assuming:
a. The NZ dollar is the functional currency of SL. (8 marks)
b. The Singaporean dollar is the functional currency of SL. (8 marks)

IN CONFIDENCE
 1. NZ dollar is the Functional 2. The Singaporean dollar is the
Local Currency
Currency Functional Currency
Exchange Exchange
Income statement for 2021 $S $NZ $NZ
rate rate
Sales revenue 7,000,000
Opening Inventory 1,000,000
Purchases 4,000,000
Ending inventory -500,000
Cost of Goods Sold 4,500,000
Gross Profit 2,500,000
Depreciation- equipment -150,000
Depreciation- building -55,000
Other expenses -400,000
Tax -1,000,000
-/+ foreign exchange gain/loss
(if applicable)
Net Profit 895,000
Retained Earnings 1/1/21 3,000,000
Dividends -500,000
Retained Earnings 31/12/21 3,395,000

Balance Sheet as at 31 December 2021

Contributed Capital 17,000,000
Additional contributed capital 3,000,000
Retained Earnings 3,395,000
Foreign Currency Translation
Reserve (if applicable)
Accounts Payable 2,000,000
Total Liabilities and Equity 25,395,000

Equipment (net) 17,850,000

Building (net) 4,055,000
Inventory 500,000
Cash and accounts receivable 2,990,000
Total Assets 25,395,000

Relevant exchange rates were as follows:

1 January 2021: S$1.00 = NZ$ 1.10
1 October 2021: S$1.00 = NZ$ 1.14
15 October 2021: S$1.00=NZ$ 1.16
1 December 2021 S$1.00= NZ$ 1.17
15 December 2021: S$1.00 = NZ$ 1.18
31 December 2021: S$1.00 = NZ$ 1.20
Average 2021: S$1.00 = NZ$ 1.15

IN CONFIDENCE