Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Chapter 12, Problem 12.24P
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
The entries recorded by A in 20X3 for its investment in WR.
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. 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.
Necessary documentation and support for the amounts recorded in
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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…
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
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…
es
Rolfe Company (a US-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 16,820
12, 200
4,220
42,200
(21,100)
NGN 54,340
2020
Feb. 1 Paid 8,220,000 NGN on the note payable.
May 1 Sold entire inventory for 18,200,000 NGN on accou
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
June 1 Sold land for 6,220,000 NGN cash.
Aug. 1 Collected all accounts receivable.
Sept. 1 Signed long-term note to receive 8,220,000 NGN cash.
Oct. 1 Bought inventory for 20,220,000 NGN cash.
2011
2013
Nov. 1 Bought land for 3,220,008 NGN on account.
Dec. 1 Declared and paid 3,220,000 NON cash dividend to parent.
Dec.31 Recorded depreciation for the entire year of 2,110,000 NON.
The US…
Chapter 12 Solutions
Advanced Financial Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Prob. 12.2QCh. 12 - Prob. 12.3QCh. 12 - How widely used are IFRS? Can IFRS be used for...Ch. 12 - Prob. 12.5QCh. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.13QCh. 12 - Prob. 12.14QCh. 12 - Prob. 12.15QCh. 12 - Prob. 12.16QCh. 12 - Prob. 12.17QCh. 12 - Prob. 12.18QCh. 12 - Prob. 12.19QCh. 12 - Prob. 12.20QCh. 12 - Prob. 12.4CCh. 12 - Prob. 12.5CCh. 12 - Prob. 12.6CCh. 12 - Prob. 12.7CCh. 12 - Prob. 12.1.1ECh. 12 - Prob. 12.1.2ECh. 12 - Prob. 12.1.3ECh. 12 - Prob. 12.1.4ECh. 12 - Prob. 12.1.5ECh. 12 - Prob. 12.1.6ECh. 12 - Prob. 12.1.7ECh. 12 - Prob. 12.2.1ECh. 12 - Prob. 12.2.2ECh. 12 - Prob. 12.2.3ECh. 12 - Prob. 12.2.4ECh. 12 - Prob. 12.2.5ECh. 12 - Prob. 12.2.6ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4.1ECh. 12 - Prob. 12.4.2ECh. 12 - Prob. 12.4.3ECh. 12 - Prob. 12.4.4ECh. 12 - Prob. 12.4.5ECh. 12 - Prob. 12.4.6ECh. 12 - Prob. 12.4.7ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Translation with Strengthening U.S. Dollar Refer...Ch. 12 - Remeasurement with Strengthening U.S. Dollar Refer...Ch. 12 - Prob. 12.11ECh. 12 - Prob. 12.12ECh. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Prob. 12.15ECh. 12 - Prob. 12.16PCh. 12 - Prob. 12.17PCh. 12 - Prob. 12.18PCh. 12 - Proof of Translation Adjustment Refer to the...Ch. 12 - Prob. 12.20PCh. 12 - Prob. 12.21PCh. 12 - Remeasurement and Proof of Remeasurement Gain or...Ch. 12 - Prob. 12.23PCh. 12 - Prob. 12.24PCh. 12 - Prob. 12.25PCh. 12 - Prob. 12.26PCh. 12 - Prob. 12.27PCh. 12 - Prob. 12.28PCh. 12 - Prob. 12.29PCh. 12 - Prob. 12.30PCh. 12 - Prob. 12.31PCh. 12 - Prob. 12.32PCh. 12 - Prob. 12.33P
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