Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary
Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2020, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows:
| Main Operation—Canada | |||||
| Debit | Credit | ||||
| Accounts payable | C$ | 21,695 | |||
| Accumulated |
33,000 | ||||
| Buildings and equipment | C$ | 173,000 | |||
| Cash | 32,000 | ||||
| Common stock | 56,000 | ||||
| Cost of goods sold | 209,000 | ||||
| Depreciation expense | 7,500 | ||||
| Dividends, 4/1/20 | 25,000 | ||||
| Gain on sale of equipment, 6/1/20 | 5,600 | ||||
| Inventory | 85,000 | ||||
| Notes payable—due in 2023 | 75,000 | ||||
| Receivables | 74,000 | ||||
| 141,590 | |||||
| Salary expense | 29,000 | ||||
| Sales | 318,000 | ||||
| Utility expense | 9,600 | ||||
| Branch operation | 6,785 | ||||
| Totals | C$ | 650,885 | C$ | 650,885 | |
| Branch Operation—Mexico | |||||
| Debit | Credit | ||||
| Accounts payable | Ps | 53,100 | |||
| Accumulated depreciation | 20,100 | ||||
| Building and equipment | Ps | 46,000 | |||
| Cash | 62,000 | ||||
| Depreciation expense | 2,600 | ||||
| Inventory (beginning—income statement) | 29,000 | ||||
| Inventory (ending—income statement) | 31,000 | ||||
| Inventory (ending—balance sheet) | 31,000 | ||||
| Purchases | 63,000 | ||||
| Receivables | 27,000 | ||||
| Salary expense | 9,600 | ||||
| Sales | 130,000 | ||||
| Main office | 36,000 | ||||
| Totals | Ps | 270,200 | Ps | 270,200 | |
Additional Information
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The Canadian subsidiary’s functional currency is the Canadian dollar, and Sendelbach’s reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities.
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The building and equipment used in the Mexican operation were acquired in 2010 when the currency exchange rate was C$0.19 = Ps 1.
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Purchases of inventory were made evenly throughout the fiscal year.
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Beginning inventory was acquired evenly throughout 2019; ending inventory was acquired evenly throughout 2020.
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The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$6,785 on December 31, 2020.
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Currency exchange rates for 1 Ps applicable to the Mexican operation follow:
| Weighted average, 2019 | C$ | 0.24 |
| January 1, 2020 | 0.26 | |
| Weighted average rate for 2020 | 0.28 | |
| December 31, 2020 | 0.29 | |
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The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $42,950 credit (positive) balance. (Already answered below)
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The subsidiary’s common stock was issued in 2007 when the exchange rate was $0.51 = C$1.
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The subsidiary’s December 31, 2019, retained earnings balance was C$141,590, an amount that has been translated into U.S.$66,803.
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The applicable currency exchange rates for 1 C$ for translation purposes are as follows:
| January 1, 2020 | US$ | 0.70 |
| April 1, 2020 | 0.69 | |
| June 1, 2020 | 0.68 | |
| Weighted average rate for 2020 | 0.67 | |
| December 31, 2020 | 0.65 | |
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Remeasure the Mexican operation’s account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.)
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Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars.
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Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements.
Remeasure the Mexican operation’s account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.) (Input all amounts as positive values.)
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2&3 please answer this question
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