Abbey Limited was incorporated in Sydney, Australia in April 2012. Abbey Limited operates from its head office in Sydney and a branch in Lagos, Nigeria. The Nigerian branch was opened due to demand from West African customers for the company’s products.
As at 31 March 2015, the subsequent trial balances were obtained from the ledgers of the Sydney and Lagos offices respectively.
Additional information is as follows:
i. The premises were purchased on 31 March 2013.
ii. The plant and machinery was purchased on 27 March 2013.
iii.Provision for unrealised profit amounting to AUSD600 in the Lagos office inventory is to be made.
iv. On 31 March 2015, the branch remitted ₦32,000. This amount was received by the Sydney office on 2 April 2015. This transaction realised AUSD3,980.
v. In the month of February 2015, a customer in the Lagos office paid by mistake to the Sydney office for inventory purchased in the Lagos office. The amount yet to be paid was ₦640. The transaction realised AUSD72. The Sydney office made the necessary correction but the Lagos office was yet to make the necessary corrections.
The exchange rates were:
At 1 April 2014 ₦258 = AUSD1
At 31 March 2015 ₦242 = AUSD1
The year’s average ₦250 = AUSD1
At 31 March 2013 ₦135 = AUSD1
At 27 March 2013 ₦132 = AUSD1
Required: Convert the trial balance of the Lagos office to the functional currency of the Sydney office.
Suggested answer to practice activity 19.3
Conversion of the trial balance of the Lagos office to the functional currency of the Sydney office
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