On January 1, 2018, TATA Systems, a U.S.-based company, purchased a controlling interest in GEELY Management Consultants located in Zurich, Switzerland. January 1 December 31 Cash and Receivable 5,000 13,750 Net property , Plant &Equipment 10,000 9,250 Total 15,000 23,000 Accounts Payable 7,500 8,000 Common Stock 5,000 5,000 Retained Earnings 2,500 10,000 Total 15,000 23,000 Revenues 18,750 Operating Expenses (including Deprecation 750) 7.500 Net Income 11,250 Dividends declared & paid 3,750 Increase in Retained Earnings 7,500 Direct exchange rates for Swiss franc are: Dollars per Franc January 1, 2018 $.5987 December 31, 2018 .5321 Average for 2018 .5654 Dividend declaration and payment data .5810 Required: Translate the year-end balance sheet and income statement of the foreign subsidiary using The current rate method of translation Convert (re measure) the financial statements of the foreign subsidiary using the temporal method of translation.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing

Section: Chapter Questions

Problem 32P

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Question 2: On January 1, 2018, TATA Systems, a U.S.-based company, purchased a controlling interest in GEELY Management Consultants located in Zurich, Switzerland.

	January 1	December 31
Cash and Receivable	5,000	13,750
Net property , Plant &Equipment	10,000	9,250
Total	15,000	23,000

Accounts Payable	7,500	8,000
Common Stock	5,000	5,000
Retained Earnings	2,500	10,000
Total	15,000	23,000

Revenues	18,750
Operating Expenses (including Deprecation 750)	7.500
Net Income	11,250
Dividends declared & paid	3,750
Increase in Retained Earnings	7,500

Direct exchange rates for Swiss franc are:

	Dollars per Franc
January 1, 2018	$.5987
December 31, 2018	.5321
Average for 2018	.5654
Dividend declaration and payment data	.5810

Required: Translate the year-end balance sheet and income statement of the foreign subsidiary using

The current rate method of translation
Convert (re measure) the financial statements of the foreign subsidiary using the temporal method of translation.

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