International Accounting
5th Edition
ISBN: 9781260466492
Author: Doupnik, Timothy
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 7, Problem 18EP
a.
To determine
Prepare
b.
To determine
Prepare trial balance and compute the re -measurement gain or loss to be reported by Company C in Year 1, in case the functional currency of subsidiary is same as the parent’s reporting currency.
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Agullar Company establishes a subsidiary operation in a foreign country on January 1, 2024. The country's currency is the rial (R). To
start this business, Agullar Invests 10,000 rials. Of this amount, It spends 3,000 rials Immediately to acquire equipment. Later, on April 1.
2024, It also purchases land. All subsidiary operational activities occur at an even rate throughout the year. Aguilar uses the U.S. dollar
as its reporting currency. The U.S. dollar ($) exchange rates for the rial for 2024 follow:
January 1
April 1
June 1
Cash
Accounts receivable
Equipment
Accumulated depreciation
Land
Accounts payable
Notes payable (due 2032)
Common stock
Dividends declared (6/1/24)
Sales
Salary expense
Weighted average
December 31
As of December 31, 2024, the subsidiary reports the following trial balance:
Depreciation expense
Miscellaneous expenses
Totals
Cash
Accounts receivable
Equipment
Accumulated depreciation
$ 1.71
1.59
1.66
Land
Accounts payable
Notes payable
Common stock
Dividends…
Sean Regan Company formed a subsidiary in a foreign country on January 1, Year 1, through a combination of debt and equity financing. The foreign subsidiary acquired land on January 1, Year 1, which it rents to a local farmer. The foreign subsidiary’s financial statements for its first year of operations, in foreign currency units (FC), are presented in Exhibit 9.3 . All revenues and expenses were realized in cash during the year. Thus, the balance in the Cash account at December 31 (FC 1,750) is equal to the beginning balance in cash (FC 1,000) plus net income for the year (FC 750). The foreign country experienced significant inflation in Year 1, especially in the second half of the year. The general price index (GPI) during Year 1 was
:January 1, Year 1 100Average, Year 1 125December 31, Year 1 200
The rate of inflation in Year 1 is 100 percent [(200 − 100)/100], and the foreign country clearly meets the definition of a hyperinflationary economy.
(in FC) January 1…
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).
Chapter 7 Solutions
International Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - 6. What are the major differences between IFRS and...Ch. 7 - Prob. 7QCh. 7 - 8. Which translation method does U.S. GAAP require...Ch. 7 - Prob. 9QCh. 7 - 10. How are gains and losses on foreign currency...
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Prob. 1EPCh. 7 - Prob. 2EPCh. 7 - Prob. 3EPCh. 7 - Prob. 4EPCh. 7 - 4. Which of the following best explains how a...Ch. 7 - In the translated financial statements, which...Ch. 7 - Prob. 7EPCh. 7 - Prob. 8EPCh. 7 - Prob. 9EPCh. 7 - Prob. 10EPCh. 7 - The Year 1 financial statements of the Chinese...Ch. 7 -
10. Simga Company's Turkish subsidiary repented...Ch. 7 - Prob. 13EPCh. 7 - Prob. 14EPCh. 7 - Prob. 15EPCh. 7 - Prob. 16EPCh. 7 - Prob. 17EPCh. 7 - Prob. 18EPCh. 7 - 16. Access the most recent annual report for a...Ch. 7 - Prob. 21EPCh. 7 - Prob. 22EPCh. 7 - Prob. 1CCh. 7 - Prob. 2C
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