ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 12, Problem 12.24P
a
To determine
Introduction: Translation adjustment is the method used to convert the local currency into the parents' functional currency when the local currency is the foreign entity’s functional currency. The current rate is used to translate the financial statements that are the exchange rate on the balance sheet date. The average rate is used to translate revenue and expenses as it is assumed that it occurs uniformly over the period. Any gain or loss on account of translation adjustment is recognized in the comprehensive income statement.
The entries recorded by P. in 20X3 for its investment in SR.
b
To determine
Introduction: Translation adjustment is the method used to convert the local currency into the parents' functional currency when the local currency is the foreign entity’s functional currency. The current rate is used to translate the financial statements that are the exchange rate on the balance sheet date. The average rate is used to translate revenue and expenses as it is assumed that it occurs uniformly over the period. Any gain or loss on account of translation adjustment is recognized in the comprehensive income statement.
Necessary documentation and support for the amounts recorded in
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SEE SCREENSHOT ATTACHED Required:
a) Compute the effects of these investments on Simpson’s reported sales, net income, and cashflows for each of the years 2004 and 2005.
b) Compute the carrying (book) value of Simpson’s investment in Bailey as of December 31, 2004, and December 31, 2005.
Identify the U.S. GAAP-based accounting method Simpson would use to account for its inter corporate investment in Bailey for 2006. Give two reasons this accounting method must/should be used.
for reference check b) book value, 12/31/2005, $3,600,000
On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment
cost of Swiss francs (SFr) 71,000. SunTime's December 31, 20X1, trial balance in SFr is as follows:
Cash
Accounts Receivable (net)
Receivable from Popular Creek
Inventory
Plant and Equipment
Accumulated Depreciation
Accounts Payable
Bonds Payable
Common Stock
Sales
Cost of Goods Sold
Depreciation Expense
Operating Expense
Dividends Paid
Total
Additional Information
January 1
March 1
Debit
SFr 8,300
23,000
7,000
28,000
110,000
SFr 1 = $ 0.73
SFr 1 = $ 0.74
SFr 1 $ 0.77
SFr 1 =
$ 0.80
SFr 1 = $ 0.75
70,500
11,100
31,000
18,000
SFr 306,900
Credit
SFr 11,100
12,400
52,000
71,000
160,400
1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $6,000 payable to SunTime.
2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
3. Equipment is depreciated by…
Classification
1. An entity invests in a pool of assets that is managed by an
investment house. In accordance with the entity's business
model, the investment will be held until it matures in 10 years'
time, at which date the entity will collect the principal amount
in the investment together with the interest earned. In
accordance with the principles of PFRS 9, the entity will most
likely measure the investment at
c. FVOCI (Mandatory).
d. FVOCI (Election).
a. Amortized cost.
b. FVPL.
2. An entity plans to purchase a new machine in a few years'
time. The cost of the new machine is significant. To address
this, the entity invests in debt securities. The entity's
investment management strategy is to hold the investment
and collect the investment income in the form of interest.
However, when opportunity arises, the entity sells the
investment in order to realize fair value gain. The entity
reinvests any proceeds from sales until the date of purchase of
the new machine. In accordance with…
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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