BABA Corporation, a US Company, formed a subsidiary with a new company in France on January12020, by msting 400,000 Euro in exchange for all of the subsidiary's common stock. On July 1, 2020, the subsidiary purchased land for t00000 Euro and a building for 300,000 Euro. The building is being depreciated over a 40-year ife by the straight ne method The inventory is valued at historical cost The Euro is the subsidiarys functional currency and ns reporting cumency Exchange raes for the Euro on various dates were: January 1, 2020 July 1, 2020 December 31, 2020 1 Euro= $1.51 1 Euro$1.56 1 Euro = $1.53 1 Euro$1.52 2020average rate The subsidiary's adjusted trial balance shows the following balances 100,000 60,000 80,000 100,000 Cash Accounts receivable Inventory Land Building Accumulated depreciation Accounts payable Notes Payable 300,000 3,750 84,000 16,750 a00 000 Common stnrk 9 of 11 Next> Drou

BABA Corporation, a US Company, formed a subsidiary with a new company in France on January12020, by msting 400,000 Euro in exchange for all of the subsidiary's common stock. On July 1, 2020, the subsidiary purchased land for t00000 Euro and a building for 300,000 Euro. The building is being depreciated over a 40-year ife by the straight ne method The inventory is valued at historical cost The Euro is the subsidiarys functional currency and ns reporting cumency Exchange raes for the Euro on various dates were: January 1, 2020 July 1, 2020 December 31, 2020 1 Euro= $1.51 1 Euro$1.56 1 Euro = $1.53 1 Euro$1.52 2020average rate The subsidiary's adjusted trial balance shows the following balances 100,000 60,000 80,000 100,000 Cash Accounts receivable Inventory Land Building Accumulated depreciation Accounts payable Notes Payable 300,000 3,750 84,000 16,750 a00 000 Common stnrk 9 of 11 Next> Drou

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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Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 76,000 pounds. The subsidiary immediately borrowed 180,000 pounds on a five-year note with 6 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 256,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,400 pounds per month. By year-end, rent payments totaling 84,000 pounds had been received, and 16,800 pounds was in accounts receivable. On October 1, 2020, 3,200 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,800 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
On January 1, 2019, Parker, Inc., a U.S.-based firm, acquired 100 percent of Suffolk PLC located in Great Britain for consideration paid of 52,000,000 British pounds (£), which was equal to fair value. The excess of fair value over book value is attributable to land (part of property, plant, and equipment) and is not subject to depreciation. Parker accounts for its investment in Suffolk at cost. On January 1, 2019, Suffolk reported the following balance sheet: Cash Accounts receivable $ 2,000,000 Accounts payable 3,000,000 Long-term debt 14,000,000 Common stock 40,000,000 Retained earnings $59,000,000 $ 1,000,000 $,000,000 44,000,000 6,000,000 Inventory Property, plant, and equipment (net) $59,000,000 Suffolk's 2019 income was recorded at £2,000,000. It declared and paid no dividends in 2019. On December 31, 2020, two years after the date of acquisition, Suffolk submitted the following trial balance to Parker for consolidation: Page 537 Cash $ 1,500,000 5,200,000 Accounts Receivable…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
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Panama Company acquired 60 % of Samoa Corporation on 1/2018. Fair values of Samoa's assets and liabilities approximated book values on that date. Panama uses the initial value method to account for its investment in Samoa. only answer D.) E.) F.) On 1/2019, Panama bought equipment from Samoa for $60,000 that had originally cost Samoa $120,000 and had $ 90,000 of Accumulated depreciation at the time. The equipment had a five-year remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2020 fiscal year. a. Was this equipment sale upstream or downstream?b. How much unrealized net gain from the equipment transfer remains at the beginning of 2020? (this is the amount you will need for the *TA entry at 1/2020.)c. Which company's Retained earnings account will be adjusted in the *TA entry in part a? (Which company was the “initiator” of the transaction?)d. How much excess depreciation will there be in each of the first five years after…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 94,000 pounds. The subsidiary immediately borrowed 225,000 pounds on a five-year note with 9 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 319,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,850 pounds per month. By year-end, rent payments totaling 88,500 pounds had been received, and 17,700 pounds was in accounts receivable. On October 1, 2020, 4,100 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,575 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
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Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 73,000 pounds. The subsidiary immediately borrowed 146,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 219,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,100 pounds per month. By year-end, rent payments totaling 81,000 pounds had been received, and 16,200 pounds was in accounts receivable. On October 1, 2020, 3,000 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 13,200 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 69,000 pounds. The subsidiary immediately borrowed 146,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 215,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 4,200 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 13,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2024, by investing capital in the amount of 78,000 pounds. The subsidiary immediately borrowed 185,000 pounds on a five-year note with 7 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 263,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2024, the subsidiary rented the building for three years to a group of local attorneys for 8,450 pounds per month. By year-end, rent payments totaling 84,500 pounds had been received, and 16,900 pounds was in accounts receivable. On October 1, 2024, 3,300 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,775 pounds back to Sullivan's Island Company on December 31, 2024. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound…