PAF3063

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