Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method. The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 12.23P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

A schedule providing a proof of the translation adjustment.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Palermo Incorporated purchased 80 percent of the outstanding stock of Salina Ranching Company, located in Australia, on January 1, 20X3. The purchase price in Australian dollars (A$) was A$200,000, and A$40,000 of the differential was allocated to plant and equipment, which is amortized over a 10-year period. The remainder of the differential was attributable to a patent. Palermo Incorporated amortizes the patent over 10 years. Salina Ranching's trial balance on December 31, 20X3, in Australian dollars is as follows: Cash Accounts Receivable (net) Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Payable to Palermo Incorporated Interest Payable 12% Bonds Payable Premium on Bonds Common Stock Retained Earnings Sales Cost of Goods Sold Depreciation Expense Operating Expenses Interest Expense Dividends Paid Total Additional Information: Debits A$ 44,100 Credits 72,000 86,000 240,000 A$ 60,000 53,800 330,000 24,000 131,500 5,700 9,000 A$ 942,300 10,800 3,000 100,000…

Palermo Incorporated purchased 80 percent of the outstanding stock of Salina Ranching Company, located in Australia, on January 1, 20X3. The purchase price in Australian dollars (A$) was A$200,000, and A$40,000 of the differential was allocated to plant and equipment, which is amortized over a 10-year period. The remainder of the differential was attributable to a patent. Palermo Incorporated amortizes the patent over 10 years. Salina Ranching's trial balance on December 31, 20X3, in Australian dollars is as follows: Debits Credits A$ 44,100 72,000 86,000 240,000 A$ 60,000 Required: a. Prepare a schedule translating the December 31, 20X3, trial balance of Salina Ranching from Australian dollars to U.S. dollars. b. Prepare a schedule providing a proof of the translation adjustment. Cash Accounts Receivable (net) Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Payable to Palermo Incorporated Interest Payable 12% Bonds Payable Premium on Bonds Common Stock Retained…

Panama Company acquired 60 %of Samoa Corporation on 1/2018. Fair values of Samoa's assets and liabilitiesapproximated book values on that date. Panama uses the initial value methodto account for its investment in Samoa.On 1/2019, Panama bought equipment from Samoa for $60,000 that hadoriginally cost Samoa $120,000 and had $ 90,000of Accumulated depreciation at the time. The equipment had a five-yearremaining 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 thebeginning 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 entryin part a? (Which company was the “initiator” of the transaction?)d. How much excess depreciation will there be in each of the first five yearsafter the transfer?e. Panama's 2020 net…

Answer 2

Question

Chapter 12, Problem 12.23P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

A schedule providing a proof of the translation adjustment.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 12.23P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

A schedule providing a proof of the translation adjustment.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 12.23P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

A schedule providing a proof of the translation adjustment.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 12.23P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

A schedule providing a proof of the translation adjustment.

Answer 6

Chapter 12, Problem 12.23P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

Answer 7

Chapter 12, Problem 12.23P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The schedule translating the December 31, 20X3, trial balance of WR from Australian dollars to U.S. dollars.

Answer 8

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

A schedule providing a proof of the translation adjustment.

Answer 9

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

A schedule providing a proof of the translation adjustment.

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 13

Ch. 12 - Prob. 12.1Q Ch. 12 - Prob. 12.2Q Ch. 12 - Prob. 12.3Q Ch. 12 - How widely used are IFRS? Can IFRS be used for...Ch. 12 - Prob. 12.5Q Ch. 12 - Prob. 12.6Q Ch. 12 - Prob. 12.7Q Ch. 12 - Prob. 12.8Q Ch. 12 - Prob. 12.9Q Ch. 12 - Prob. 12.10Q

Solution Summary: The author explains translation adjustment as the most common method used when the local currency is the foreign entity's functional currency.

Videos

Want to see the full answer?

Chapter 12 Solutions