Foreign Currency Transactions

SECTION A GlobalTrade Co has a foreign subsidiary, EuroBranch. During the year, EuroBranch declared and paid a dividend to GlobalTrade. At the year-end, GlobalTrade is preparing its consolidated financial statements. According to IAS 21 The Effects of Changes in Foreign Exchange Rates, how should the exchange differences arising on the translation of EuroBranch's net assets be treated in the consolidated financial statements?

SECTION B - CASE 3: FinServe Solutions FinServe Solutions Co is a fintech payment processor. The year-end is 31 March 20X7. On 1 February 20X7, FinServe purchased new servers from a US supplier for $100,000. The invoice is payable on 30 April 20X7. FinServe's functional currency is the €. Exchange rates (€1 = $X): 1 February 20X7: $1.25 31 March 20X7: $1.20 At what amount should the servers (Property, Plant and Equipment) be initially recognized on 1 February 20X7?

SECTION B - CASE 3: FinServe Solutions FinServe Solutions Co is a fintech payment processor. The year-end is 31 March 20X7. Following on from the previous question, FinServe's functional currency is the Euro (€). It purchased servers for $100,000 USD on 1 February 20X7. The invoice is unpaid at 31 March 20X7. Exchange rates (€1 = $X): 1 February 20X7: $1.25 31 March 20X7: $1.20 What is the exchange gain or loss to be recognized in the statement of profit or loss for the year ended 31 March 20X7?

**Section A** On 1 October 20X6, EuroBuild Co (functional currency: Euros) took out a loan of $1,000,000 USD. The exchange rate on this date was €1 = $1.10. At the financial year-end on 31 December 20X6, the exchange rate was €1 = $1.05. What is the foreign exchange gain or loss to be recognized in profit or loss for the year ended 31 December 20X6?