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 $12380 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 C $1,000. IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000)

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 $12380 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 C $1,000. IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rolfe Company (a U.S.-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 15,670 10,300 4,030 40,300 (20,150) NGN 50,150 Notes payable Common stock Retained earnings 2020 Feb. 1 Paid 8,030,000 NGN on the note payable. May 1 Sold entire inventory for 16,300,000 NGN on account. June 1 Sold land for 6,030,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,030,000 NGN cash. Oct. 1 Bought inventory for 20,030,000 NGN cash. Nov. 1 Bought land for 3,030,000 NGN on account. NGN 20,060 20,060 10,030 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: Dec. 1 Declared and paid 3,030,000 NGN cash dividend to parent. Dec.31…
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On September 30, 2017, Ericson Company negotiated a two-year, 1,000,000 dudek loan from a foreign bank at an interest rate of 2 percent per year. It makes interest payments annually on September 30 and will repay the principal on September 30, 2019. Ericson prepares U.S.-dollar financial statements and has a December 31 year-end.a. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 dudek:b. Taking the exchange rate effect on the cost of borrowing into consideration, determine the effective interest rate in dollars on the loan in each of the three years 2017, 2018, and 2019.
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Voltac Corporation (a U.S.-based company) has the following import/export transactions denominated in Mexican pesos in 2020: Bought inventory costing 100,000 pesos on credit. March 1 May 1 August 1 September 1 Sold 60 percent of the inventory for 80,000 pesos on credit. Collected 70,000 pesos from customers. Paid 60,000 pesos to suppliers. Currency exchange rates for 1 peso for 2020 are as follows: Date March 1 May 1 August 1 September 1 December 31 Assume that all receipts were converted into dollars as soon as they were received. For each of the following accounts, what amount will Voltac report on its 2020 financial statements? Inventory Cost of goods sold с Sales d Accounts receivable e Accounts payable Cash U.S. Dollar per Peso $ 0.10 0.12 0.13 0.14 0.15 a b
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Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 19,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 19,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 3.70 $ 3.775 December 31, 2020 3.80 3.900 March 1, 2021 3.95 N/A a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. Record the purchase of materials. Record the forward contract. Record the entry to revalue the foreign currency account payable. Record the change in the fair…
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Rolfe Company (a U.S.-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 NGN 15,120 Notes payable NGN 20,160 Inventory 10,800 Common stock 20,160 Land 4,080 Retained earnings 10,080 Building 40,800 Accumulated depreciation (20,400 ) NGN 50,400 NGN 50,400 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: 2020 Feb. 1 Paid 8,080,000 NGN on the note payable. May 1 Sold entire inventory for 16,800,000 NGN on account. June 1 Sold land for 6,080,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,080,000 NGN cash. Oct. 1 Bought inventory for 20,080,000 NGN cash. Nov. 1…
Rolfe Company (a U.S.-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 2011 2013 August 1, 2019 December 31, 2019 February 1, 2020 May 1, 2020 June 1, 2020 August 1, 2020 September 1, 2020 NGN 16,790 Notes payable Common stock Retained. 11,900 earnings 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: October 1, 2020 November 1, 2020 December 1, 2020 December 31, 2020 Average for 2020 4,190 41,900 (20,950) NGN 53,830 2020 Feb. 1 Paid 8,190,000 NGN on the note payable. May 1 Sold entire inventory for 17,900,000 NGN on account. June 1 Sold land for 6,190,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,190,000 NGN…
Choose the correct.Matthias Corp. had the following foreign currency transactions during 2017:∙ Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $60,000 and paid the invoice on April 20 at the U.S. dollar equivalent of $50,000.∙ On September 1, borrowed the U.S. dollar equivalent of $300,000 evidenced by a note that is payable in the lender’s local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $320,000.In Matthias’s 2017 income statement, what amount should be included as a net foreign exchange gain or loss?a. $10,000 gainb. $10,000 lossc. $20,000 gaind. $30,000 loss
Case 2. Honda Phil. is a subsidiary of Honda Japan. The functional currency of Honda Phil. is peso while the presentation currency of its parent, Honda Japan is yen. For the year ended December 31, 2020, Honda Phil. has the following foreign currency denominated assets: Accounts Receivable of $1,000 and Prepaid Asset of $100. The historical rates of Accounts receivable and Prepaid asset are $1=P30 and $1=P20 and P1=2Yen and P1=4Yen, respectively. The exchange rate on December 31, 2020 is 1$=40 and P1=3Yen. 2. In the separate statement of financial position of Honda Phil. on December 31, 2020, what is the book value of accounts receivable and prepaid asset, respectively? 3. what is the book value of accounts receivable and prepaid asset, respectively, in the Consolidated Statement of Financial Position of Honda Japan?