Julia Ltd is a Namibian entity that manufactures electronic equipment. The year-end of Julia Ltd is 30 June. On 1July 2014 Julia Ltd acquired 65% interest in Olga Ltd, an entity with a functional currency of Euro (€).
The consideration amounted to N$10 000. At the date of acquisition Julia Ltd determined that a plot owned by Olga Ltd was undervalued by N$1 200.
The trial balance of the two entities for the year ended 30 June 2015 is given below.
|
|
Julia Ltd (N$)
|
Olga Ltd (€)
|
|
Land and buildings
|
524 000
|
356
|
|
Plant and equipment
|
282 000
|
674
|
|
Investment in Olga Ltd
|
10 000
|
0
|
|
Inventory
|
83 000
|
54
|
|
Accounts receivable
|
95 000
|
78
|
|
Bank
|
102 000
|
93
|
|
Share capital
|
200 000
|
100
|
|
Retained earnings 1 July 2014
|
355 000
|
972
|
|
Long term loan
|
130 000
|
86
|
|
Accounts payable
|
76 000
|
24
|
|
Sales
|
740 000
|
165
|
|
Cost of sales
|
296 000
|
66
|
|
Operating expenses
|
109 000
|
26
|
The following exchange rates applied:
|
Closing rates
|
1€$
|
|
30 June 2014
|
12.87
|
|
1 July 2014
|
12.74
|
|
30 June 2015
|
11.98
|
|
|
|
|
Average rates
|
|
|
1 July 2013 - 30 June 2014
|
13.04
|
|
1 July 2014 - 30 June 2015
|
13.65
|