ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 12, Problem 12.30P
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
Preparation of a schedule translating the selected accounts into dollars as of December 31, 20X1 and 20X2. Assuming local currency unit is the foreign subsidiary’s functional currency.
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Students have asked these similar questions
Translate the foreign currency financial statements below using the current rate (functional) method.
Assume the company was incorporated, began business, and became subsidiary of an US firm on January
1, 2016, and the foreign currency was the functional currency.
Date
January 1, 2016
January 1, 2019
March 31, 2019
Rate
1 FC=$0.10
1 FC=$0.20
1 FC=$0.25
1 FC=$0.40
1 FC=$0.30
December 31, 2019
Weighted average for 2019
Financial Statements of Street Corporation for the year ended December 31, 2019
FC
Rate
Dollars
Income Statement
Net sales
Costs and expenses
Net income
10,000,000
8,000,000
2,000,000
Statement of Retained Earnings
Beginning retained earnings
8,000,000
2,000,000
10,000,000
1,000,000
9,000,000
1,600,000
Net income
Subtotal
Dividends (declared March 31)
Ending retained earnings
Balance Sheet
Assets
Current assets
Fixed assets (acquired 1/1/2016)
Total assets
13,000,000
82,000,000
95,000,000
Liabilities and stockholders' equity
Current liabilities
|Long-term debt
|Common…
Which translation method results in a set of financial statements as if the foreign subsidiary’s transactions were carried out in US dollars?
Current rate method
Temporal method
ASSUME THAT THE LOCAL CURRENCY UNIT IS THE FUNCTIONAL CURRENCY.
Cade Inc. had a debit adjustment of $6400 for the year ended December 31, 2019, from restating its foreign
subsidiary's accounts from their local currency units into U.S. dollars.
Additionally, Cade 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 Cade's balance
sheet at $121000. When the receivable was collected on February 15, 2019, the U.S. dollar-equivalent was $123800.
In Cade'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:
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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