A wholly owned subsidiary of a U.S. parent company has certain expense accounts for the year ended December 31, 2011, stated in local currency units (LCU) as follows: LCU Depreciation of equipment (related assets were purchased January 1, 2009) 375,000 Provision for doubtful accounts 250,000 Rent 625,000 The exchange rates at various dates are as follows: Dollar equivalent of I LCU $0.50 December 31, 2011 0,55 Average for year ended December 31, 2011 0,40 January 1. 2009 - ill e 10:59 7-TI/-W EN
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- A U.S. company's foreign subsidiary had the following amounts in stickles (5), the functional currency, in 2018: Cost of goods sold $12,000, e00 Ending inventory Beginning inventory 600,000 240,000 The average exchange rate during 2018 was 81 = $.96. The beginning inventory was acquired when the exchange rate was §1 = $1.20. The ending inventory was acquired when the exchange rate was §1 = $.90. The exchange rate at December 31, 2018 was §1= $.84. Assuming that the foreign nation for the subsidiary had a highly inflationary economy, at what amount should that foreign subsidiary's purchases have been reflected in the 2018 U.S. dollar income statement? Multiple Cholce $11,865,600. $11.577,600. $11.520.000. $11,613,600. $11,523,600.Given the following balance sheet of a US based MNC’s fully operational subsidiary, who operates in Japan and whose functional currency is the Japanese Yen, determine the amount of the translation exposure in dollars if the Yen depreciates by 10% from ¥110/$ to ~¥122/$ by applying the current rate method. Balance Sheet of Subsidiary in ¥ Assets Liabilities + Equity Cash ¥145,000 Accounts Payable ¥246,000 A/R ¥104,000 Short Term Debt ¥128,000 Inventory ¥275,000 Long term debt ¥329,000 PPE ¥895,000 Common Stock ¥534,000 Retained Earnings ¥182,000 Total ¥1,419,000 ¥1,419,000Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1, 20x1 for £200,000 with payment required on April 1, 20x2. Relevant exchange rates are: October 1, 20x1 April 1, 20x2 Spot rate December 31, 20x1 1.86 $1.87 O Liability $1,880 O Asset $1,880 O Asset $3,880 O Liability $3,880 1.90 Forward rate (to 4/1/x2) $1.85 $1.84 The discount factor corresponding to the company's incremental borrowing rate for 3 months is 0.94. Assume that Amazing Corporation enters a forward contract on October 1, 20x1 to sell £200,000 six months hence, on April 1, 20x2. How should Amazing Corporation report the forward contract on its December 31, 20x1 financial statements?
- 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…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…Bento Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2020, for 100,000 crowns. It paid the foreign currency account payable on January 15, 2021. The following exchange rates are relevant: Date U.S. Dollar per Crown November 1, 2020 $ 0.754 December 31, 2020 $ 0.742 January 15, 2021 $ 0.747 How does the fluctuation in the U.S. dollar per crown exchange rate affect Bento’s 2020 income statement? How does the fluctuation in the U.S. dollar per crown exchange rate affect Bento’s 2021 income statement?
- A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2020: Cost of goods sold LCU 5,590,000 Beginning inventory 501,000 Ending inventory 604,000 The average exchange rate during 2020 was $1.50 = LCU 1. The beginning inventory was acquired when the exchange rate was $1.30 = LCU 1. Ending inventory was acquired when the exchange rate was $1.60 = LCU 1. The exchange rate at December 31, 2020, was $1.65 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost of goods sold be reflected in the U.S. dollar income statement?Required information Newberry, Inc., whose reporting currency is the U.S. dollar ($), has a subsidiary in Argentina, whose functional currency also is the $. The subsidiary acquires inventory on credit on November 1, 2017, for 210,000 pesos that is sold on January 17, 2018, for 243,000 pesos. The subsidiary pays for the inventory on January 31, 2018. Currency exchange rates are as follows: $0.54 =1 peso November 1, 2017 December 31, 2017 January 17, 2018 January 31, 2018 0.55 =1 0.56 =1 %3D 0.57 =1Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash Inventory Land Building Accumulated depreciation NGN 15,670 10,300 4,030 40,300 (20,150) NGN 50,150 Notes payable Common stock Retained earnings 2020 Feb. 1 Paid 8,030,000 NGN on the note payable. May 1 Sold entire inventory for 16,300,000 NGN on account. June 1 Sold land for 6,030,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,030,000 NGN cash. Oct. 1 Bought inventory for 20,030,000 NGN cash. Nov. 1 Bought land for 3,030,000 NGN on account. NGN 20,060 20,060 10,030 The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: Dec. 1 Declared and paid 3,030,000 NGN cash dividend to parent. Dec.31…
- Honesty Company purchased merchandise worth a total of 100,000 foreign currency on April 1, 2022 from its foreign supplier, payable within 30 days. On April 30, 2022, Honesty paid the note. The following information of spot rates is provided (see image below). Answer the following subquestion(s): a. How much is the foreign exchange gain (loss)? _________________On December 31, 2008 a foreign subsidiary in US submitted the following balances stated in foreign currency:In US$ Total Assets 140,000 Total Liabilities 28,000 Ordinary Share 70,000 Retained Earnings 42,000 Relevant exchange rates are: current rate – P8.75; historical rate – P8.10; weighted average rate – P8.50. Assuming that the retained earnings of the subsidiary in December 31, 2008 translated to the peso is P290,000. What amount of cumulative translation adjustment is to be reported in the consolidated balance sheet on December 31, 2008?A U.S. company's foreign subsidiary had these amounts in local currency units (LCU) in 2024: Cost of goods sold Beginning inventory Ending inventory LCU 5,230,000 536,000 622,000 The average exchange rate during 2024 was $1.30 = LCU 1. The beginning inventory was acquired when the exchange rate was $1.10 = LCU 1. Ending inventory was acquired when the exchange rate was $1.40 LCU 1. The exchange rate on December 31, 2024, was $1.45 = LCU 1. Required: Assuming that the foreign country is highly inflationary, determine the amount at which the foreign subsidiary's cost of goods sold should be reflected in the U.S. dollar income statement. Cost of goods sold