On 1 July 2017, Westland Limited an Australian company acquired the issued shares of Bull Limited a company incorporated in the United States.

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Case Study B
On 1 July 2017, Westland Limited an Australian company acquired the issued shares of Bull Limited a company incorporated in the United States. The draft statement of profit or loss and other comprehensive income and statement of financial position of Bull Ltd at 30 June 2018 was as follows:
Sales revenues US$ US$
Cost of sales: 1 600 000
Opening inventories 140 000
Purchases 840 000
980 000 700 000
000
Closing inventories 280
Gross profit
900 000
Expenses: 000 360 000
Depreciation 90 000
Other 270
Profit before income tax
540 000
200 000
Income tax expense
Profit
340 000
200 000
Retained earnings as at 1 July 2017
540 000
Dividend paid 120 000 320 000
000
200
Dividend declared
Retained earnings as at 30 June 2018 2200

2018 2017
US$ US$
Current assets: 280 000 140 000
Inventories
Accounts receivable Cash 20 000 130 000
20 000 570 000
Total current assets 320 000 840 000
Non-current assets:
Patent 80 000 80 000
Plant 720 000 600 000
Accumulated depreciation Land (130 000) (80 000)
500 000 300 000
Buildings 920 000 820 000
Accumulated depreciation _(120 (80 000)
000) 640 000
1 970 000 1
Total non-current assets Total assets
2 290 000 2 480 000
Current liabilities: 500 000 620 000
Provisions 320 000 940 000
Accounts payable
Total current liabilities
820 000 1 560 000
Non-current liabilities: Loan from Westland Ltd 530 000
Total liabilities 1 350 000 1 560 000
Net assets 940 000 920 000
Equity:
Share capital Retained earnings 720 000 720 000
220 000 200 000
Total equity 940 000 920 000
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Case Study B
On 1 July 2017, Westland Limited an Australian company acquired the issued shares of Bull Limited a company incorporated in the United States. The draft statement of profit or loss and other comprehensive income and statement of financial position of Bull Ltd at 30 June 2018 was as follows:
Sales revenues US$ US$
Cost of sales: 1 600 000
Opening inventories 140 000
Purchases 840 000
980 000 700 000
000
Closing inventories 280
Gross profit
900 000
Expenses: 000 360 000
Depreciation 90 000
Other 270
Profit before income tax
540 000
200 000
Income tax expense
Profit
340 000
200 000
Retained earnings as at 1 July 2017
540 000
Dividend paid 120 000 320 000
000
200
Dividend declared
Retained earnings as at 30 June 2018 2200

2018 2017
US$ US$
Current assets: 280 000 140 000
Inventories
Accounts receivable Cash 20 000 130 000
20 000 570 000
Total current assets 320 000 840 000
Non-current assets:
Patent 80 000 80 000
Plant 720 000 600 000
Accumulated depreciation Land (130 000) (80 000)
500 000 300 000
Buildings 920 000 820 000
Accumulated depreciation _(120 (80 000)
000) 640 000
1 970 000 1
Total non-current assets Total assets
2 290 000 2 480 000
Current liabilities: 500 000 620 000
Provisions 320 000 940 000
Accounts payable
Total current liabilities
820 000 1 560 000
Non-current liabilities: Loan from Westland Ltd 530 000
Total liabilities 1 350 000 1 560 000
Net assets 940 000 920 000
Equity:
Share capital Retained earnings 720 000 720 000
220 000 200 000
Total equity 940 000 920 000
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Additional information
(a) On 1 January 2018, Bull Ltd acquired new plant for US$120 000. This plant is depreciated over a 5-year period.
(b) On 1 April 2018, Bull Ltd acquired US$200 000 worth of land.
(c) On 1 October 2017, Bull Ltd acquired US$100 000 worth of new buildings. These buildings are depreciated evenly over a 10-year period.
(d) The interim dividend was paid on 1 January 2018, half of which was from profits earned prior to 1 July 2017, while the dividend payable was declared on 30 June 2018.
(e) Sales, purchases and expenses occurred evenly throughout the period. The inventories on hand at 30 June 2018 were acquired during June 2018.
(f) The loan of US$530 000 from Westland Limited was granted on 1 July 2017. The interest rate is 8% p.a. Interest is paid on 30 June and 1 January each year.
EXCHANGE RATES
The exchange rates for the financial year were as follows:
US$,
A$
1 July 2017 2.00
1 October 2017 1.80
1 January 2018 1 April 2018 1.70
1.60
30 June 2018 Average June 2018 1.50
1.52
Average for 2017-18 1.75
Required
1. If the functional currency for BULL LIMITED is the US dollar, prepare the financial statements of BULL LIMITED at 30 June 2018 in the presentation currency

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