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  3. (b) truly berhad has a 100%-owned foreign subsidia

(b) Truly Berhad has a 100%-owned foreign subsidiary, which has a carrying value at a...

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Accounting

(b) Truly Berhad has a 100%-owned foreign subsidiary, which has a carrying value at a cost of RM25 million. It sells the subsidiary on 31 December 2019 for $45million. As at 31 December 2019, the credit balance on the exchange reserve, which relates to this subsidiary, was RM6 million. The functional currency of the entity is the Ringgit Malaysia and the exchange rate on 31 December 2019 is RM1 to $1.5. The net asset value of the subsidiary at the dateof disposal was RM28 million.

Required:

Explain the accounting treatment forthe disposal transaction. [4 marks]

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