Exercise 12-14 (Algo) Computation of Gain or Loss on Sale of Asset by Foreign Subsidiary LO 12-4, 12-6On December 31, 20X2, your company's Mexican subsidiary sold land at a selling price of 3.100,000 pesos. The land had beenpurchased for 2.1 million pesos on January 1, 20X1, when the exchange rate was 10 pesos to 1 U.S. dollar. The exchange rate for 1 U.S.dollar was 11 pesos on December 31, 20X1, and 12 pesos on December 31, 20X2. Assume that the subsidiary had no other assets andno liabilities during the two years that it owned the land.Required:a. Prepare all entries regarding the purchase and sale of the land that would be made on the books of the Mexican subsidiary, whoserecording currency is the Mexican peso.b. Determine the amount of the gain or loss on the transaction that would be reported on the subsidiary's remeasured incomestatement in U.S. dollars, assuming the U.S. dollar is the functional currency. Determine the amount of the remeasurement gain orloss that would be reported on the remeasured income statement in U.S. dollars.c. Determine the amount of the gain or loss on the transaction that would be reported on the subsidiary's translated income statementin U.S. dollars, assuming the Mexican peso is the functional currency. Determine the amount of the other comprehensive incomethat would be reported on the consolidated statement of other comprehensive income for 20x2.Complete this question by entering your answers in the tabs below.Required A Required B Required CPrepare all entries regarding the purchase and sale of the land that would be made on the books of the Mexican subsidiary, whoserecording currency is the Mexican peso.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.View transaction listNo1Event1View journal entry worksheetLandCashGeneral JournalDebit2,100,000Credit2,100,000

The rate at which one country’s currency can be converted into another country’s currency referred…

On December 31, 20X2, your company's Mexican subsidiary sold land at a selling price of 3.100,000 pesos. The land had been purchased for 2.1 million pesos on January 1, 20X1, when the exchange rate was 10 pesos to 1 U.S. dollar. The exchange rate for 1 U.S. dollar was 11 pesos on December 31, 20X1, and 12 pesos on December 31, 20X2. Assume that the subsidiary had no other assets and no liabilities during the two years that it owned the land.

On December 31, 20X2, your company's Mexican subsidiary sold land at a selling price of 3.100,000 pesos. The land had been purchased for 2.1 million pesos on January 1, 20X1, when the exchange rate was 10 pesos to 1 U.S. dollar. The exchange rate for 1 U.S. dollar was 11 pesos on December 31, 20X1, and 12 pesos on December 31, 20X2. Assume that the subsidiary had no other assets and no liabilities during the two years that it owned the land.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 26PC

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