ADVANCED ACCOUNTING(LL) W/CONNECT
13th Edition
ISBN: 9781260282382
Author: Hoyle
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 4P
To determine
Identify the appropriate answer for the given statement from the given choices.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16 = 1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12 = 1 yuan. Which of the following statements is true for the consolidated financial statements? Choose the correct.a. A remeasurement gain must be reported.b. A positive translation adjustment must be reported.c. A negative translation adjustment must be reported.d. A remeasurement loss must be reported.
Which of the following statements is true for the translation process using the current rate method?a. A translation adjustment can affect consolidated net income.b. Equipment is translated at the historical exchange rate in effect at the date of its purchase.c. A translation adjustment is created by the change in the relative value of a subsidiary’s monetary assets and monetary liabilities caused by exchange rate fluctuations.d. A translation adjustment is created by the change in the relative value of a subsidiary’s net assets caused by exchange rate fluctuations.
Stiff Sails Corporation, a U.S. company, operates a 100%-owned British subsidiary, SeaBeW
Corporation. The U.S. dollar is the functional currency of the subsidiary. Financial statements for the
subsidiary for the fiscal year-end December 31, 2024, are as follows:
Sales
Cost of Goods Sold
Beginning Inventory
Purchases
Cost of Goods Sold
Depreciation
B.
Goods Available For Sale
Less: Ending Inventory
Selling and Admin. Expenses
Income Taxes
Net Income
Current Assets
Cash
Accts. Rec.
Inventories
Required:
A.
SeaBeWe Corporation
Income Statement
155,000
171,000
285,000
611,000
SeaBeWe Corporation
Partial Balance Sheet
310,000
265,000
575,000
285,000
290,000
79,000
155,000
32,000
July 1, 2022
Jan. 1, 2024
June 30, 2024
Dec. 31, 2024
Average for 2024
1. Cost of Goods Sold.
2. Depreciation Expense.
3. Equipment.
Other Information:
1. Equipment costing 340,000 pounds was acquired July 1, 2022, and 38,000 was acquired June 30,
2024. Depreciation for the period was as follows:
Pounds
650,000…
Chapter 10 Solutions
ADVANCED ACCOUNTING(LL) W/CONNECT
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
Knowledge Booster
Similar questions
- A subsidiary’s functional currency is the U.S. dollar. The exchange rate used to convert depreciation expense for a building on the subsidiary’s financial statements from its local currency unit to the U.S. dollar is the: Select one: a. Current rate b. Historical rate c. Average historical rate d. Weighted average ratearrow_forward! Required information 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 April 1, 2017 June 1, 2017 December 31, 2017 $ 0.45 =1 won 0.46 =1 0.47 =1 %3D 0.49 = 1arrow_forwardGains from remeasuring a foreign subsidiary's financial statements from the local currency, which is not the functional currency, into the parent company's currency should be reported as a : O a. part of continuing operations O b. other comprehensive income item O c. deferred credit O d. extraordinary item (net of tax)arrow_forward
- Yang Corporation starts a foreign subsidiary on January 1 by investing 20,000 rand. Yang owns all of the shares of the subsidiary’s common stock. The foreign subsidiary generates 40,000 rand of net income throughout the year and pays no dividends. The rand is the foreign subsidiary’s functional currency. Currency exchange rates for 1 rand are as follows:In preparing consolidated financial statements, what translation adjustment will Yang report at the end of the current year?a. $400 positive (credit).b. $1,000 positive (credit).c. $1,400 positive (credit).d. $2,400 positive (credit).arrow_forwardWhich of the following statements is true for the translation process using the current rate method? Choose the correct.a. A translation adjustment can affect consolidated net income.b. Equipment is translated at the historical exchange rate in effect at the date of its purchase.c. A translation adjustment is created by the change in the relative value of a subsidiary’s monetary assets and monetary liabilities caused by exchange rate fluctuations.d. A translation adjustment is created by the change in the relative value of a subsidiary’s net assets caused by exchange rate fluctuations.arrow_forwardWahl Company’s 20X5 consolidated financial statements include two wholly owned subsidiaries, Wahl Company of Australia (Wahl A) and Wahl Company of France (Wahl F). Functional currencies are the U.S. dollar for Wahl A and the European euro for Wahl F. Required 1) What are the objectives of translating a foreign subsidiary’s financial statements? 2) How are gains and losses arising from the translation or remeasurement of each subsidiary’s financial statements measured and reported in Wahl’s consolidated financial statements? 3) What exchange rate is used to incorporate each subsidiary’s equipment cost, accumulated depreciation, and depreciation expense in Wahl’s consolidated financial statements?arrow_forward
- Assume that Palm Company owns 100% of Wu Company which is located in China. Wu's functional currency is the U.S. dollar. On 1/1/X1, Wu Company acquired equipment for 100,000 yen when the exchange rate was $1.2 per yen. During year X1, Wu has recorded S-L depreciation of 10,000 yen based on a 10-year life. The 12/31/X1 exchange rate is $1.4 and the average exchange rate for the year was $1.3. Based on this information, Wu's depreciation expense should be reported at which of the following amounts on 12/31/X1?arrow_forwardHughes 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.…arrow_forwardRequired information 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: $ 0.45 January 1, 2017 April 1, 2017 June 1, 2017 December 31, 2017 =1 won 0.46 =1 0.47 =D1 0.49 =1arrow_forward
- 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…arrow_forwardA U.S. company owns an 80% interest in a company located on Mars. Martian currency is called the Martian Credit. During the year the parent company sold inventory that had cost $24,000 to the subsidiary on account for $30,800 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 the fiscal period. The unsettled account is denominated in dollars. The exchange rate at the fiscal year-end was $0.4994. Assuming that the transaction had been denominated in 47,004 Martian Credits rather than dollars, compute the transaction gain or loss that would be reported by the parent company.arrow_forwardABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: January 1, 2020: December 31, 2020: Average for 2020: Date of Purchase of Inventory on Hand: US $1- CDN $0.815 US $1 CDN $0.8176 CDN $0.825 CDN $0.83 US $1- US $1 = Date Dividends were declared: US $1 = CDN $0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements at December 31, 2020 (in U.S. dollars) Income Statement: Sales $5.000,000 $3,500,000 Cost of Sales Depreciation Expensearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning