Reference no: EM132962953

Zai Bhd acquired a specialized machine EUR40,000 with a useful life of 10 years on 1 July 2018. Half of the amount was paid by Azman Bhd at the date of acquisition by issuing new ordinary shares and the balance is still unpaid. The exchange rates were as follows:

1 July 2018 EUR1 = RM4.50
30 June 2019 EUR1 = RM4.80

The fair value of the machine as at 30 June 2019 is EUR35,000. Azman Bhd use revaluation model to account for its property, plant and equipment. The financial year end is on 30 June.

Problem 1. Illustrate journal entry for the acquisition of the specialized machine on 1 July 2018.

a) Dr Machine RM180,000 Cr Bank RM180,000
b) Dr Machine RM180,000 Cr Ordinary share RM180,000
c) Dr Machine RM180,000 Cr Ordinary share RM90,000 Cr Other payable RM90,000
d) Dr Machine RM8,888 Cr Ordinary share RM4,444 Cr Other payable RM4,444

Problem 2. Determine the deficit or surplus on foreign exchange transaction as at 30 June 2019.

a) Deficit on foreign exchange RM6,000
b) Surplus on foreign exchange RM6,000
c) Deficit on foreign exchange RM12,000
d) Surplus on foreign exchange RM12,000