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Accounting for Business Combinations: The trial balance of Honesty Company at December 31, 2022, a 100% owned subsidiary of ABC Company, is presented below (denominated in US dollars) (see image below). Additional information: The subsidiary started operation in February 2021 and the capital stock transactions occurred on that date. The Bonds Payable was transacted in November 2021. Property and Equipment were acquired in April 2021. The dividends were declared in June 2022. The translated amount of Retained Earnings at the beginning of the year is P14,100,000. Apply the temporal method. Exchange rate at various dates follow: February 2021 - 53.00; April 2021 - 54.00; November 2021 - 50.00; December 2021 - 52.00; January 2022 - 49.00; June 2022 - 55.00; December 2022 - 46.00; and Average (2022) - 47.25 Solve for the following subquestions:  a. How much is the Translation Amount of Net Income? b. How much is the Translated Amount of Assets? c. How much is the Translated Amount of Liabilities? ____________________

Accounting for Business Combinations: The trial balance of Honesty Company at December 31, 2022, a 100% owned subsidiary of ABC Company, is presented below (denominated in US dollars) (see image below). Additional information: The subsidiary started operation in February 2021 and the capital stock transactions occurred on that date. The Bonds Payable was transacted in November 2021. Property and Equipment were acquired in April 2021. The dividends were declared in June 2022. The translated amount of Retained Earnings at the beginning of the year is P14,100,000. Apply the temporal method. Exchange rate at various dates follow: February 2021 - 53.00; April 2021 - 54.00; November 2021 - 50.00; December 2021 - 52.00; January 2022 - 49.00; June 2022 - 55.00; December 2022 - 46.00; and Average (2022) - 47.25 Solve for the following subquestions:  a. How much is the Translation Amount of Net Income? b. How much is the Translated Amount of Assets? c. How much is the Translated Amount of Liabilities? ____________________

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accounting for Business Combinations:

The trial balance of Honesty Company at December 31, 2022, a 100% owned subsidiary of ABC Company, is presented below (denominated in US dollars) (see image below).


Additional information:

  • The subsidiary started operation in February 2021 and the capital stock transactions occurred on that date.
  • The Bonds Payable was transacted in November 2021.
  • Property and Equipment were acquired in April 2021.
  • The dividends were declared in June 2022.
  • The translated amount of Retained Earnings at the beginning of the year is P14,100,000.
  • Apply the temporal method.
  • Exchange rate at various dates follow: February 2021 - 53.00; April 2021 - 54.00; November 2021 - 50.00; December 2021 - 52.00; January 2022 - 49.00; June 2022 - 55.00; December 2022 - 46.00; and Average (2022) - 47.25

Solve for the following subquestions: 

a. How much is the Translation Amount of Net Income?

b. How much is the Translated Amount of Assets?

c. How much is the Translated Amount of Liabilities?

____________________

 

Cash Accounts Receivable Inventory Property and Equipment Accumulated Depreciation Accounts Payable Bonds Payable Share Capital Retained Earnings Revenue Cost of Sales Operating Expenses Depreciation Expense Dividends Total 120,000 300,000 440,000 1,750,000 600,000 431,250 175,000 50,000 3,866,250 306,250 225,000 585,000 1,000,000 250,000 1,500,000 3,866,250
Transcribed Image Text:Cash Accounts Receivable Inventory Property and Equipment Accumulated Depreciation Accounts Payable Bonds Payable Share Capital Retained Earnings Revenue Cost of Sales Operating Expenses Depreciation Expense Dividends Total 120,000 300,000 440,000 1,750,000 600,000 431,250 175,000 50,000 3,866,250 306,250 225,000 585,000 1,000,000 250,000 1,500,000 3,866,250
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