ADVANCED FINANCIAL ACCOUNTING IA
ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 12, Problem 12.1.3E
To determine

Introduction: Translation is the method used to convert financial results of the business of subsidiary company into the functional currency of parent company.

Re-measurement: It is process to measure the financial results of any other currency into functional currency.

To choose: The correct option.

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1. Entity A, a government entity, acquires a machine for $10,000 on November 1, 20x1, on account, and settles the account on January 3, 20x2. The machine is estimated to have a useful life of 5 years and a residual value of 5% of cost. Entity A uses the straight line method of depreciation. The exchange rates are as follows. November 1, 20x1 $1 P50 December 31 20x1 $1 P40 January 3 20x2 $1P45 How much is the net foreign exchange gain (loss) recognized in surplus or deficit from the transaction?| a. P10.000 C. (P5 000) b. (P10,000) d. P5000
es Rolfe Company (a US-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s] Cash Inventory Land Building Accumulated depreciation NGN 16,820 12, 200 4,220 42,200 (21,100) NGN 54,340 2020 Feb. 1 Paid 8,220,000 NGN on the note payable. May 1 Sold entire inventory for 18,200,000 NGN on accou The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place June 1 Sold land for 6,220,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,220,000 NGN cash. Oct. 1 Bought inventory for 20,220,000 NGN cash. 2011 2013 Nov. 1 Bought land for 3,220,008 NGN on account. Dec. 1 Declared and paid 3,220,000 NON cash dividend to parent. Dec.31 Recorded depreciation for the entire year of 2,110,000 NON. The US…
4. On January 1, the wholly- owned Mexican affiliate of a Canadian percent company acquired an inventory of computer hard drives for its assembly operation.  The cost incurred was 351000 pesos when the exchange rate was MXN 11.7=C$1. By year-end, the Mexican affiliate had used three-fourths of the acquired hard drives. Due to advance in hardware technology, the remaining inventory was marked down to its net realizable value of MXN 18000. The year-end exchange rate was MXN 10.5 = C$1. The average rate during  the year was MXN 10 = C$1.Translate the ending inventory to Canadian dollars assuming the Mexican affiliate’s functional currency is the Canadian dollar

Chapter 12 Solutions

ADVANCED FINANCIAL ACCOUNTING IA

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