SdSubject: acounting A U.S. company owns an 80% interest in a company located on Mars. Martian currency is called the Martian Credit. During the yearthe parent company sold inventory that had cost $24,500 to the subsidiary on account for $30,100 when the exchange rate was$0.5192. The subsidiary still held one-half of the inventory and had not paid the parent company for the purchase at the end of thefiscal period. The unsettled account is denominated in dollars. The exchange rate at the fiscal year-end was $0.4994.(a1)Compute the amounts that would be reported for the inventory and accounts payable in the subsidiary's translated balance sheet.The entity's functional currency is the Martian Credit. (Round answers to O decimal places, e.g. 5,125.)InventoryAccounts Payable$$

All foreign currency transaction should be recognize using the rate on the date of transaction,…

Answered: company owns company locate the year…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 25PC

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On January 1, Narnevik Corporation formed a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory on account at a cost of 250,000 local currency units (LCU). One-fifth of this inventory remained unsold on December 31, while 30 percent of the account payable had not yet been paid. The U.S. $ per LCU exchange rates were as follows:At what amounts should the December 31 balances in inventory and accounts payable be translated into U.S. dollars using the current rate method?
On January 1, Narnevik Corporation formed a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory on account at a cost of 250,000 local currency units (LCU). One-fifth of this inventory remained unsold on December 31, while 30 percent of the account payable had not yet been paid. The U.S.dollar–per-LCU exchange rates were as follows: January 1 $ 0.60 April 1 0.58 Average for the current year 0.56 December 31 0.54 At what amounts should the December 31 balances in inventory and accounts payable be translated into U.S. dollars using the current rate method?
In order to demonstrate the use of the remeasurement process, assume that at the beginning of the year a U.S. parent company invested 100,000 foreign currency B (FCB) to form a 100% owned subsidiary.The subsidiary immediately invested the foreign currency in land at a cost of 50,000 FCB and inventory with a cost of 50,000 FCB. At midyear, 50% of the inventory was sold for 40,000 FCB. At year-end, assume that the sale is still uncollected. Although FCB is the subsidiary’s functional currency, the subsidiary maintains its books of record in foreign currency A (FCA). Assume the following exchange rates: Beginning of Year Mid Year End of Year1 FCB equals . . . . . . 12.5 FCA 8 FCA 10 FCA1 FCA equals. . . . . . 0.08 FCB 0.125 FCB 0.10 FCB1 FCA equals. . . . . . $0.20 $0.40 $0.301 FCB equals . . . . . . $2.50…
Meadows Limited, a foreign subsidiary of U.S. based Meadows Inc. operates primarily for the benefit of its parent company. When the exchange rate was $1.30 per one British Pound Sterling (£), Meadows Limited purchased Inventory for £2,100 pounds. Meadows resells one-third of the inventory for £900 when the exchange rate was $1.26 per Pound Sterling and another one-third for £900 when the exchange rate was $1.28 per Pound Sterling. The parent company applies the temporal method in its process of consolidating the financial results of its subsidiaries with its own financial results. Meadows Inc. reports sales revenue associated with its subsidiary in the amount of: Multiple Choice: $2,340 $2,304 $2,286 $2,268
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Columbia Corporation, a U.S.-based company, acquired a 100% interest in Swoboda Company in Lodz, Poland on January 1, Year 1 when the exchange rate for the Polish zloty was $0.25. Translate Swoboda’s financial statements into U.S dollars in accordance with U.S. GAAP at December 31, Year 2, using the three scenarios presented in the case and explain why the translation adjustments end up as positive or negative numbers.
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Columbia Corporation, a U.S.-based company, acquired a 100% interest in Swoboda Company in Lodz, Poland on January 1, Year 1 when the exchange rate for the Polish zloty was $0.25. Translate Swoboda’s financial statements into U.S dollars in accordance with U.S. GAAP at December 31, Year 2, using the three scenarios presented in the case and explain why the translation adjustments end up as positive or negative numbers. Read the case on page 325 of the textbook and submit an Excel file with your response to questions 1 and 2. For question 1, prepare the financial statements under each of the three scenarios as instructed.
Hughes Inc. has a wholly owned subsidiary in Canada that previously had been determined as having the Canadian dollar as its functional currency. Due to a recent restructuring, Hughes Inc.'s CFO believes that the functional currency of the Canadian company has changed to the U.S. dollar. A large cumulative translation adjustment related to the Canadian subsidiary is included in accumulated other comprehensive income on Hughes Inc.'s balance sheet. The CFO is unsure whether the cumulative translation adjustment should be removed from equity, and if so, to what other account it should be transferred. He also questions whether the change in functional currency qualifies as a change in accounting principle, which would require retrospective application of the temporal method in translating the Canadian subsidiary's financial statements. He wonders, for example, whether the Canadian subsidiary's nonmonetary assets need to be restated as if the temporal in applied in previous years.…
Kingsfield establishes a subsidiary operation in a foreign country on January 1, 2020. The country’s currency is the rial (R). To start this business, Kingsfield invests 10,000 rials. Of this amount, it spends 3,000 rials immediately to acquire equipment. Later, on April 1, 2020, it also purchases land. All subsidiary operational activities occur at an even rate throughout the year. Kingsfield uses the U.S. dollar as its reporting currency. The U.S. dollar ($) exchange rates for the rial for 2020 follow: January 1 $ 1.71 April 1 1.59 June 1 1.66 Weighted average 1.64 December 31 1.62 As of December 31, 2020, the subsidiary reports the following trial balance: Debits Credits Cash R 8,000 Accounts receivable 9,000 Equipment 3,000 Accumulated depreciation R 600 Land 5,000 Accounts payable 3,000 Notes payable (due 2028) 5,000 Common stock 10,000 Dividends declared…
Columbia Corporation, A U.S.- based compan, acquired a 100 percent interest in Swoboda Company in Lodz, Poland, on January 1, Year 1, when the exchange rate for the Polish zloty (PLN) was $0.25. The financial statements of Swoboda as of December 31, Year 2, two years later, are as follows: Look at images!

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