ADVANCED ACCOUNTING
13th Edition
ISBN: 9781264046263
Author: Hoyle
Publisher: MCG
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Question
Chapter 10, Problem 25P
a.
To determine
Determine the Israeli shekel amounts at which the Swiss franc balances should be reported on the Israeli subsidiary December 31, 2017
b.
To determine
Determine the US Dollar amount at which the Swiss franc balances should be included in IPO’s 2017 consolidated financial statement.
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ASSUME THAT THE U.S. DOLLAR IS THE FUNCTIONAL CURRENCY.
Ruthie Inc. had a debit adjustment of $7900 for the year ended December 31, 2019, from restating its foreign
subsidiary's accounts from their local currency units into U.S. dollars.
Additionally, Ruthie had a receivable from a foreign customer. It is denominated in the customer's local currency. On
December 31, 2018, this receivable for 300,000 local currency units (LCU) was correctly included in Ruthie's balance
sheet at $124200. When the receivable was collected on February 15, 2019, the U.S. dollar-equivalent was $122200.
In Ruthie's 2019 consolidated statement of income, how much should be reported as foreign exchange gain/(loss) in
computing net income?
BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF
$1,000.
IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000)
Your Answer:
Kingsfield establishes a subsidiary operation in a foreign country on January 1, 2020. The country’s currency is the rial (R). To start this business, Kingsfield invests 10,000 rials. Of this amount, it spends 3,000 rials immediately to acquire equipment. Later, on April 1, 2020, it also purchases land. All subsidiary operational activities occur at an even rate throughout the year. Kingsfield uses the U.S. dollar as its reporting currency. The U.S. dollar ($) 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…
The Isle of Palms Company (IOP), a U.S.-based entity, has a wholly owned subsidiary in Israel that has been determined as having the Israeli shekel (ILS) as its functional currency. On October 1, 2019, the Israeli subsidiary borrowed 500,000 Swiss francs (CHF) from a bank in Geneva for two years at an interest rate of 5 percent per year. The note payable and accrued interest are payable at the date of maturity. On December 31, 2020, the Israeli subsidiary has the following foreign currency balances on its books:
Interest expense
CHF
25,000
Interest payable
CHF
31,250
Note payable
CHF
500,000
Relevant exchange rates between the Israeli shekel (ILS) and Swiss franc (CHF), and between the U.S. dollar (USD) and Israeli shekel (ILS) follow:
ILS per CHF
USD per ILS
October 1, 2019
3.86
0.30
January 1, 2020
3.91
0.29
Average for 2020
3.95
0.27
December 31, 2020
4.02
0.25
Determine the Israeli shekel amounts at which the Swiss franc balances…
Chapter 10 Solutions
ADVANCED ACCOUNTING
Ch. 10 - Prob. 1QCh. 10 - What causes balance sheet (or translation)...Ch. 10 - Prob. 3QCh. 10 - Prob. 4QCh. 10 - Prob. 5QCh. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - Prob. 8QCh. 10 - Prob. 9QCh. 10 - Prob. 10Q
Ch. 10 - Prob. 11QCh. 10 - Which translation method does U.S. GAAP require...Ch. 10 - Prob. 13QCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - What amount does Newberrys consolidated income...Ch. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Prob. 17PCh. 10 - A foreign subsidiarys functional currency is its...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - The following accounts are denominated in rubles...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Sullivans Island Company began operating a...Ch. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - The following account balances are for the Agee...Ch. 10 - Prob. 35PCh. 10 - Prob. 36PCh. 10 - Prob. 37PCh. 10 - Prob. 38PCh. 10 - Prob. 1DYSCh. 10 - RESEARCH CASE 2FOREIGN CURRENCY TRANSLATION...Ch. 10 - Prob. 3DYSCh. 10 - Prob. 4DYSCh. 10 - Prob. 5DYS
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