International Accounting
5th Edition
ISBN: 9781259747984
Author: Doupnik, Timothy S., Finn, Mark T., Gotti, Giorgio
Publisher: Mcgraw-hill Education,
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Question
Chapter 7, Problem 18EP
a.
To determine
Prepare
b.
To determine
Prepare trial balance and compute the re -measurement gain or loss to be reported by Company C in Year 1, in case the functional currency of subsidiary is same as the parent’s reporting currency.
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Agullar Company establishes a subsidiary operation in a foreign country on January 1, 2024. The country's currency is the rial (R). To
start this business, Agullar Invests 10,000 rials. Of this amount, It spends 3,000 rials Immediately to acquire equipment. Later, on April 1.
2024, It also purchases land. All subsidiary operational activities occur at an even rate throughout the year. Aguilar uses the U.S. dollar
as its reporting currency. The U.S. dollar ($) exchange rates for the rial for 2024 follow:
January 1
April 1
June 1
Cash
Accounts receivable
Equipment
Accumulated depreciation
Land
Accounts payable
Notes payable (due 2032)
Common stock
Dividends declared (6/1/24)
Sales
Salary expense
Weighted average
December 31
As of December 31, 2024, the subsidiary reports the following trial balance:
Depreciation expense
Miscellaneous expenses
Totals
Cash
Accounts receivable
Equipment
Accumulated depreciation
$ 1.71
1.59
1.66
Land
Accounts payable
Notes payable
Common stock
Dividends…
Sean Regan Company formed a subsidiary in a foreign country on January 1, Year 1, through a combination of debt and equity financing. The foreign subsidiary acquired land on January 1, Year 1, which it rents to a local farmer. The foreign subsidiary’s financial statements for its first year of operations, in foreign currency units (FC), are presented in Exhibit 9.3 . All revenues and expenses were realized in cash during the year. Thus, the balance in the Cash account at December 31 (FC 1,750) is equal to the beginning balance in cash (FC 1,000) plus net income for the year (FC 750). The foreign country experienced significant inflation in Year 1, especially in the second half of the year. The general price index (GPI) during Year 1 was
:January 1, Year 1 100Average, Year 1 125December 31, Year 1 200
The rate of inflation in Year 1 is 100 percent [(200 − 100)/100], and the foreign country clearly meets the definition of a hyperinflationary economy.
(in FC) January 1…
Gale Co. was formed on January 1, 2021 as a wholly owned foreign subsidiary of a U.S. corporation. Gale’s functional currency was the stickle (§). The following transactions and events occurred during 2021:
Jan. 1
Gale issued common stock for §2,000,000.
June 30
Gale paid dividends of §50,000.
Dec. 31
Gale reported net income of §120,000 for the year.
Exchange rates for 2021 were:
Jan. 1
$
1
=
§
0.50
June 30
$
1
=
§
0.47
Dec. 31
$
1
=
§
0.44
Weighted average rate for the year
$
1
=
§
0.46
What was the amount of the translation adjustment for 2021?
Chapter 7 Solutions
International Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - 6. What are the major differences between IFRS and...Ch. 7 - Prob. 7QCh. 7 - 8. Which translation method does U.S. GAAP require...Ch. 7 - Prob. 9QCh. 7 - 10. How are gains and losses on foreign currency...
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Prob. 1EPCh. 7 - Prob. 2EPCh. 7 - Prob. 3EPCh. 7 - Prob. 4EPCh. 7 - 4. Which of the following best explains how a...Ch. 7 - In the translated financial statements, which...Ch. 7 - Prob. 7EPCh. 7 - Prob. 8EPCh. 7 - Prob. 9EPCh. 7 - Prob. 10EPCh. 7 - The Year 1 financial statements of the Chinese...Ch. 7 -
10. Simga Company's Turkish subsidiary repented...Ch. 7 - Prob. 13EPCh. 7 - Prob. 14EPCh. 7 - Prob. 15EPCh. 7 - Prob. 16EPCh. 7 - Prob. 17EPCh. 7 - Prob. 18EPCh. 7 - 16. Access the most recent annual report for a...Ch. 7 - Prob. 21EPCh. 7 - Prob. 22EPCh. 7 - Prob. 1CCh. 7 - Prob. 2C
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