Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Question
Chapter 11, Problem 11.1.2P
To determine
Difference between Translation and Re-measurement of Foreign Financial Statement:
- Translation is most commonly used method and also called current rate method, Whereas Re-measurement is called temporal method.
- Translation is applied when local currency is equal to functional currency, Whereas Re-measurement is required only when functional currency is different from currency used to maintain books.
: Preparationof schedule to re-measure the FCA
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4.
On January 1, the wholly- owned Mexican affiliate of a Canadian percent company acquired an inventory of computer hard drives for its assembly operation.
The cost incurred was 351000 pesos when the exchange rate was MXN 11.7=C$1. By year-end, the Mexican affiliate had used three-fourths of the acquired hard drives. Due to advance in hardware technology, the remaining inventory was marked down to its net realizable value of MXN 18000. The year-end exchange rate was MXN 10.5 = C$1. The average rate during the year was MXN 10 = C$1.Translate the ending inventory to Canadian dollars assuming the Mexican affiliate’s functional currency is the Canadian dollar
On January 1, the wholly- owned Mexican affiliate
of a Canadian percent company acquired an
inventory of computer hard drives for its assembly
operation.
The cost incurred was 468000 pesos when the
exchange rate was MXN 10.5=C$1. By year-end,
the Mexican affiliate had used three-fourths of the
acquired hard drives. Due to advance in hardware
technology, the remaining inventory was marked
down to its net realizable value of MXN 29000.
The year-end exchange rate was MXN 10.6 =
C$1. The average rate during the year was MXN
11.6 = C$1.
Translate the ending inventory to Canadian
dollars assuming the Mexican affiliate's functional
currency is the Mexican peso
A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary
acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and
Equipment B had associated depreciation expense of €10,000. The subsidiary owned no other depreciable assets. Currency exchange rates between the U.S. dollar and the Euro were as follows:
January 1, 2018
December 31, 2018.
2018 Average
January 1, 2019
December 31, 2019
2019 Average
January 1, 2020
December 31, 2020
2020 Average
Multiple Choice
O
What amount would have been reported for depreciation expense related to the equipment owned by the subsidiary in Reynolds's consolidated balance sheet at December 31, 2018?
O
O
O
$29,500.
$28,500.
$30,000.
$12,000.
€1= $1.20
€1=…
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