ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 12, Problem 12.23P
Translation
Palermo Inc. purchased 80 percent of the outstanding stock of Salina Ranching Company, located in Australia, on January 1, 20X3. The purchase price in Australian dollars (AS) was A$200,000, and A$40,000 of the differential was allocated lo plant and equipment, which is amortized over a 10-year period. The remainder of the differential was attributable to a Patent. Palermo Inc. amortizes the patent over 10 years. Salina Ranching’s
Additional Information
1. Salina Ranching uses average cost for cost of goods sold. Inventory increased by A$20,000 during the year. Purchases were made uniformly during 20X3. The ending inventory was acquired at the average exchange rate for the year.
2. Plain and equipment were acquired as follows:
3. Plant and equipment are
4. The payable to Palermo is in Australian dollars. Palermo’s books show a receivable from Salina Ranching of $6,480.
5. The 10−year bonds were issued on July 1, 20X3, for A$106,000. The premium is amortized on a straight−line basis. The interest is paid on April 1 and October 1,
6. The dividends were declared arid paid on April 1.
7. Exchange rates were as follows:
Required
a. Prepare a schedule translating the December 31, 20X3, trial balance of Salina Ranching from Australian dollars to U.S. dollars.
b. Prepare a schedule providing a proof of the translation adjustment.
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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
$1P45
How much is the net foreign exchange gain (loss) recognized in surplus or deficit
from the transaction?|
a. P10.000
C. (P5 000)
b. (P10,000)
d. P5000
Palermo Incorporated purchased 80 percent of the outstanding stock of Salina Ranching Company, located in Australia, on January 1,
20X3. The purchase price in Australian dollars (A$) was A$200,000, and A$40,000 of the differential was allocated to plant and
equipment, which is amortized over a 10-year period. The remainder of the differential was attributable to a patent. Palermo
Incorporated amortizes the patent over 10 years. Salina Ranching's trial balance on December 31, 20X3, in Australian dollars is as
follows:
Debits
Credits
A$ 44,100
72,000
86,000
240,000
A$ 60,000
Required:
a. Prepare a schedule translating the December 31, 20X3, trial balance of Salina Ranching from Australian dollars to U.S. dollars.
b. Prepare a schedule providing a proof of the translation adjustment.
Cash
Accounts Receivable (net)
Inventory
Plant and Equipment
Accumulated Depreciation
Accounts Payable
Payable to Palermo Incorporated
Interest Payable
12% Bonds Payable
Premium on Bonds
Common Stock
Retained…
Palermo Incorporated purchased 80 percent of the outstanding stock of Salina Ranching Company, located in Australia, on January 1,
20X3. The purchase price in Australian dollars (A$) was A$200,000, and A$40,000 of the differential was allocated to plant and
equipment, which is amortized over a 10-year period. The remainder of the differential was attributable to a patent. Palermo
Incorporated amortizes the patent over 10 years. Salina Ranching's trial balance on December 31, 20X3, in Australian dollars is as
follows:
Cash
Accounts Receivable (net)
Inventory
Plant and Equipment
Accumulated Depreciation
Accounts Payable
Payable to Palermo Incorporated
Interest Payable
12% Bonds Payable
Premium on Bonds
Common Stock
Retained Earnings
Sales
Cost of Goods Sold
Depreciation Expense
Operating Expenses
Interest Expense
Dividends Paid
Total
Additional Information:
Debits
A$ 44,100
Credits
72,000
86,000
240,000
A$ 60,000
53,800
330,000
24,000
131,500
5,700
9,000
A$ 942,300
10,800
3,000
100,000…
Chapter 12 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 12 - Prob. 12.1QCh. 12 - Prob. 12.2QCh. 12 - Prob. 12.3QCh. 12 - How widely used are IFRS? Can IFRS be used for...Ch. 12 - Prob. 12.5QCh. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.13QCh. 12 - Prob. 12.14QCh. 12 - Prob. 12.15QCh. 12 - Prob. 12.16QCh. 12 - Prob. 12.17QCh. 12 - Prob. 12.18QCh. 12 - Prob. 12.19QCh. 12 - Prob. 12.20QCh. 12 - Prob. 12.4CCh. 12 - Prob. 12.5CCh. 12 - Prob. 12.6CCh. 12 - Prob. 12.7CCh. 12 - Prob. 12.1.1ECh. 12 - Prob. 12.1.2ECh. 12 - Prob. 12.1.3ECh. 12 - Prob. 12.1.4ECh. 12 - Prob. 12.1.5ECh. 12 - Prob. 12.1.6ECh. 12 - Prob. 12.1.7ECh. 12 - Prob. 12.2.1ECh. 12 - Prob. 12.2.2ECh. 12 - Prob. 12.2.3ECh. 12 - Prob. 12.2.4ECh. 12 - Prob. 12.2.5ECh. 12 - Prob. 12.2.6ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4.1ECh. 12 - Prob. 12.4.2ECh. 12 - Prob. 12.4.3ECh. 12 - Prob. 12.4.4ECh. 12 - Prob. 12.4.5ECh. 12 - Prob. 12.4.6ECh. 12 - Prob. 12.4.7ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Prob. 12.12ECh. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Prob. 12.15ECh. 12 - Prob. 12.16PCh. 12 - Prob. 12.17PCh. 12 - Prob. 12.18PCh. 12 - Prob. 12.19PCh. 12 - Remeasurement Gain or Loss Refer to the...Ch. 12 - Prob. 12.21PCh. 12 - Remeasurement and Proof of Remeasurement Gain or...Ch. 12 - Translation Palermo Inc. purchased 80 percent of...Ch. 12 - Prob. 12.24PCh. 12 - Prob. 12.25PCh. 12 - Prob. 12.26PCh. 12 - Prob. 12.27PCh. 12 - Prob. 12.28PCh. 12 - Prob. 12.29PCh. 12 - Prob. 12.30PCh. 12 - Prob. 12.31PCh. 12 - Prob. 12.32PCh. 12 - Prob. 12.33P
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