Assume that the U.S. dollar is the subsidiary's functional currency. What balances does a consolidated balance sheet report as of December 31, 2017? Multiple Choice Marketable equity securities = $49,000 and Inventory ='$46,000. Marketable equity securities = $49,000 and Inventory = $49,000. Marketable equity securities = $47,000 and Inventory = $47,000. Marketable equity securities = $46,000 and Inventory $46,000.
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- A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange rates for 1 won follow: January 1, 2017 $ .33 = 1 won April 1, 2017 .34 = 1 June 1, 2017 .35 = 1 December 31, 2017 .37 = 1 1. Assume that the won is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017?Marketable equity securities = $37,000 and Inventory = $37,000.Marketable equity securities = $34,000 and Inventory = $34,000.Marketable equity securities = $35,000 and Inventory = $35,000.Marketable equity securities = $37,000 and Inventory = $34,000. 2. Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017?Marketable equity…Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange January 1, 2017 . . . . . $0.15 = 1 wonApril 1, 2017 . . . . . . . . . 0.16 = 1June 1, 2017 . . . . . . . . . 0.17 = 1December 31, 2017 . . . 0.19 = 1Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017? Choose the correct.a. Marketable equity securities = $16,000 and Inventory = $16,000.b. Marketable equity securities = $17,000 and Inventory = $17,000.c. Marketable equity securities = $19,000 and Inventory = $16,000.d. Marketable equity securities = $19,000 and Inventory = $19,000.Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange January 1, 2017 . . . . . $0.15 = 1 wonApril 1, 2017 . . . . . . . . . 0.16 = 1June 1, 2017 . . . . . . . . . 0.17 = 1December 31, 2017 . . . 0.19 = 1 Assume that the won is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017? Choose the correct.a. Marketable equity securities = $16,000 and Inventory = $16,000.b. Marketable equity securities = $17,000 and Inventory = $17,000.c. Marketable equity securities = $19,000 and Inventory = $16,000.d. Marketable equity securities = $19,000 and Inventory = $19,000.
- Carl Inc. purchased inventory on September 12, 2017 from a foreign customer for 750,000 units of foreign currency (FC) due on January 12, 2018. Simultaneously, the company entered into a forward contract for 750,000 units of FC for delivery on January 12, 2018 at the forward rate of $1.03. Payment was made to the foreign customer on January 12, 2018. The company ends its fiscal year on December 31. The following exchange rates were quoted: Forward Rate Date Spot Rate (Delivery on 1/12/2018) 9/12/2017 1.01 1.03 12/31/2017 1.08 1.09 1/12/2018 1.05 Notes: Read carefully and follow strictly so that Bb can grade you correctly!1. Use comma in numbers, one thousand is 1,000, not 1000. Round to the nearest dollar: 1,000.45 should be 1,000, and 1,000.55 should be 1,001, no decimal points. No $ sign.2. If no entry is required, write N/A.3. Only use the following accounts: Inventory, A/P (FC), A/R (FC), Cash, Sales, CGS, Exchange G/L, Fwd Contract,…Assume that Gilligan Ltd enters into a contract to buy inventory from an overseas supplier. On1 February 2023 it acquires the material at a cost of US$500,000 payable in two months’ time.The exchange rate at the time is A$1 = US$1.15. The actual debt is considered to be a tradepayable and is a primary financial instrument. The exchange rate on 1 April 2023 is A$1 =US$1.09.Required:(a) As the debt is payable in two months’ time describe the potential risk to Gilligan Ltd.(b) Assume that McCoy Ltd is concerned about possible adverse exchange ratemovements, what action could the company take?Rabato Corporation acquired merchandise on account from foreign supplier on November 1, 2015, for 60,000 LCU (local currency units). It paid the foreign currency account payable on January 15, 2016. The following exchange rates for 1 LCU are known: December 1, 2015 $0.345, December 31, 2015 $0.333 and January 1, 2016 $0.359. How does the fluctuation in exchange rates affect Rabato's 2015 income statement? How does the fluctuation in exchange rates affect Rabato's 2016 income statement?
- An entity purchased 8 year debt instruments with a face value of P4,000,000 on January 1, 2017 for trading purposes. Interest is paid annually at a nominal rate of 11% that is paid every December 31. The following information is provided as follows: Date Effective Rate without Transaction Cost Effective Rate with Transaction Cost 01/01/2017 13% 12% 12/31/2017 14% 14.5% 12/31/2018 13% 14% 12/31/2019 9% 10% 12/31/2020 7% 9% 12/31/2021 12.5% 13% Requirements: What is the initial carrying amount of the bond investment? What is the 2017 interest income? What is the December 31, 2017 carrying amount? How much is the 2018 unrealized gain recognized in the income statement? What is the total or net amount recognized in profit or loss in 2019? If the entity changes its business model in 2018 to collect contractual cash flows only, what is the 2019 interest income? If the entity changes its business model in 2018 to both collect contractual cash flows and to sell…American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2016, gains from selling trading securities totaled $8 million, losses were $11 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American’s trading account during December 2016, and the first week of 2017. The company’s fiscal year ends on December 31. No trading securities were held by American on December 1, 2016. 2016 Dec. 12 Purchased FF&G Corporation bonds for $12 million. 13 Purchased 2 million Ferry Intercommunications common shares for $22 million. 15 Sold the FF&G Corporation bonds for $12.1 million. 22 Purchased U.S. Treasury bills for $56 million and Treasury bonds for $65 million. 23 Sold half the Ferry Intercommunications common shares for $10 million. 26 Sold the U.S. Treasury bills for $57 million. 27 Sold the Treasury bonds for $63 million. 28 Received…Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for given problem. Izmir A.S. issued convertible bonds at their face value of 100,000 lira on December 31, 2017. The bonds have a 10-year life with interest of 10 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 12 percent.a. Determine the appropriate accounting for this compound financial instrument for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, conversion worksheet to convert IFRS balances to U.S. GAAP.
- On September 1, 2020, Creed Co. sold merchandise to a foreign entity for 250,000 francs. Terms of the sale require payment in francs on February 1, 2021. On September 1, 2020, the spot exchange rate was P1.2 per franc. On December 31, 2020, the spot rate was P1.19, but the rate increased to P1.22 by February 1, 2021, when payment was received. Required: Provide journal entries in 2020 and 2021.1. In December 2027. Taguan Bank reported a net income of P900,000, net of trading loss of P50,000. In January 2028, Taguan reported the following gross receipts: Interest income with maturity less than 5 years P600,000Royalty income 300,000Gain from sale of derivatives 200,000How much is the cross receipts tax on the collections of Taguan for January 2028? 2. A cockpit owned by Sabungero reported the following receipts and expenses forthe period: Gross receipts from cockpit entrance fee - P500,000; Gross receipts from restaurant inside cockpit compound: Food sales - 200,000; Beverage sales - 100,000; Business expenses - 50,000; The total amusement tax is: 3. A Family corporation has 750,000 of its par common stocks outstanding. Its Board of Directors decided to Issue for the first time for public ownership 400,000 of its unissued common stocks. The 400,000 shares were sold for P12 per share. The percentage tax is1 - Enterprise A's FX safe balance is 1000 $ and the registered exchange rate is 4.60 TL. The entity made a year-end valuation. Since the announced rate is 4.70 TL, what is the registration to be made?A) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 100 02 Dollars Case 100 646 Foreign Exchange Profit 100 B) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 100 01 TL Case 100 646 Foreign Exchange Profit 100C) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 100 02 Dollars Case 1100 646 Foreign Exchange Profit 1100D) THE CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 100 01 TL Cash 1100 646 Foreign Exchange Profit 1100E) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 656 Foreign Exchange Loss 100 100 02 Dollars Case 100