Reference no: EM131818236

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