Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 3P
To determine
Identify the transaction which clearly interprets the given scenario.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Choose the correct. On October 1, 2017, Tile Co., a U.S. company, purchased products from Azulejo, a Portuguese company, with payment due on December 1, 2017. If Tile’s 2017 operating income included no foreign exchange gain or loss, the transaction could havea. Been denominated in U.S. dollars.b. Resulted in an unusual gain.c. Generated a foreign exchange gain to be reported as a deferred charge on the balance sheet.d. Generated a foreign exchange loss to be reported as a separate component of stockholders’ equity.
On October 1, 2020, Mud Co., a U.S. company, purchased parts from Terra, a Portuguese company, with payment due on December 1, 2020. If Mud's 2020 operating income included no foreign exchange gain or loss, the transaction could have _____.
A. Been denominated in U.S. dollars.
B. Generated a foreign exchange gain to be reported as a deferred charge on the balance sheet.
C. Resulted in an extraordinary gain.
D. Generated a foreign exchange loss to be reported as a separate component of stockholders' equity.
During 2016 a U.S. firm sold inventory to a foreign customer. The transaction was denominated in the local
currency of the buyer. The direct exchange rate decreased from the date of the transaction to the end of
the fiscal period; the rate increased from the end of the fiscal period to the date of the account was settled
in 2017. A transaction gain or loss should be recognized
O a. 2016 0; 2017 0
Ob. 2016 gain; 2017 loss
O c 2016 loss; 2017 loss
O d. 2016 loss; 2017 gain
Chapter 9 Solutions
Advanced Accounting
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - What factors create a foreign exchange gain on a...Ch. 9 - In what way is the accounting for a foreign...Ch. 9 - Prob. 5QCh. 9 - How does a foreign currency option differ from a...Ch. 9 - Prob. 7QCh. 9 - Why would a company prefer a foreign currency...Ch. 9 - How do companies report foreign currency...Ch. 9 - How does a company determine the fair value of a...
Knowledge Booster
Similar questions
- Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for given problem. Mikkeli OY acquired a brand name with an indefinite life in 2015 for 40,000 markkas. At December 31, 2017, the brand name could be sold for 35,000 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 42,000 markkas, and the present value of this amount is 34,000 markkas.a. Determine the appropriate accounting for this brand name for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, conversion worksheet to convert IFRS balances to U.S. GAAP.arrow_forwardTurbo Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2017, for 100,000 markkas. It paid the foreign currency account payable on January 17, 2018. The following exchange rates for 1 markka are known:a. How does the fluctuation in exchange rates affect Turbo’s 2017 income statement?b. How does the fluctuation in exchange rates affect Turbo’s 2018 income statement?arrow_forwardAssume that a U.S.-based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes for given problem. Hirsch Company acquired equipment at the beginning of 2017 at a cost of $135,000. The equipment has a five-year life with no expected salvage value and is depreciated on a straight-line basis. At December 31, 2017, Hirsch compiled the following information related to this equipment: Expected future cash flows from use of the equipment . . . . . . . . $116,000Present value of expected future cash flows from use of the equipment . . . . . . . . . . . 100,000Fair value (selling price less costs to dispose) . . . . . . . . . . . . . . . . 96,600 a. Determine the appropriate accounting for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.b. Prepare the entry(ies) that Hirsch would…arrow_forward
- Turbo Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2017, for 100,000 markkas. It paid the foreign currency account payable on January 17, 2018. The following exchange rates for 1 markka are known:November 1, 2017 $0.754December 31, 2017 0.742 January 15, 2018 0.747a. How does the fluctuation in exchange rates affect Turbo’s 2017 income statement?b. How does the fluctuation in exchange rates affect Turbo’s 2018 income statement?arrow_forwardAssume that a U.S.-based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes for given problem. Parnell Company acquired construction equipment on January 1, 2017, at a cost of $78,400. The equipment was expected to have a useful life of six years and a residual value of $10,000 and is being depreciated on a straight-line basis. On January 1, 2018, the equipment was appraised and determined to have a fair value of $74,500, a salvage value of $10,000, and a remaining useful life of five years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16.a. Determine the appropriate accounting for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.b. Prepare the entry(ies) that Parnell would make on the…arrow_forwardThe net assets of a foreign operation at 30 June 2015 are constituted as assets of US$400 000 and liabilities of US$250 000. The parent entity purchased the foreign subsidiary on 1 July 2012. Exchange rate information is as follows:The foreign operation has not traded during the year ended 30 June 2015, so the net assets remained unchanged during the period. What is the parent entity's foreign currency exposure for the year ended 30 June 2015?Select one:a. foreign exchange loss A$6002b. foreign exchange gain A$20 610c. foreign exchange gain A$342 310d. foreign exchange gain A$197 185arrow_forward
- XYZ Corp, has carried out transactions denominated in foreign currency during the financial year ended 31 October 2019 and has conducted foreign operations through a foreign entity. Its functional and presentation currency is the US dollar. XYZ purchased inventory from a foreign supplier for Euros 8 million on 31 July 2019, the trade payable was still outstanding and the inventory were still held by XYZ Corp. XYZ Corp sold its products to a foreign customer for Euros 4 million on 31 July 2019 and received payment for the products in euros on 31 October 2019. Additionally, XYZ Corp purchase investment property on 1 November 2018 for Euros 28 million. At 31 October 2019, the investment property had a fair value of Euros 24 million. The company uses the fair value model in accounting for its investment properties. XYZ would like advice on how to treat this transactions in the financial statement for the year ended 31 October 2019. Exchange rates Date Euro:$ Average Rate for Year to…arrow_forwardOn December 2, 2020, Troll Company, a U.S. company, sold machinery to Amigo, a Mexican company, with payment due on March 4, 2021. If Troll's fiscal year-end is December 31 and its 2020 income from continuing operations does not include any foreign currency exchange gain or loss, it is most likely that: O A. Troll entered into a forward contract to purchase Mexican peso on March 4, 2021. O B. this transaction caused a foreign currency translation gain or loss to be adjusted to the accounts receivable (Mex$). O C. this sale was denominated in U.S. dollars. O D. this transaction resulted in a foreign currency transaction gain or loss to be included in other comprehensive income.arrow_forwardAssume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for given problem. Sapporo K.K. was sued by a competitor in late 2017, and company management concluded that there was a 55 percent probability that the company would lose the lawsuit. The best estimate of the loss on December 31, 2017, was 4,000,000 yen. In 2018, the lawsuit is concluded with Sapporo paying its competitor 5,000,000 yen on May 15, 2018.a. Determine the appropriate accounting for this lawsuit for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.arrow_forward
- Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for given problem. Tapatio S.A. de C.V. acquired a new piece of manufacturing equipment on January 1, 2016, for a cash price of 500,000 pesos. The equipment was expected to have a useful life of 10 years and no residual value, and is being depreciated on a straight-line basis. On January 1, 2017, the equipment was appraised and determined to have a fair value of 540,000 pesos, zero salvage value, and a remaining useful life of 9 years. Tapatio uses the revaluation model in IAS 16 to measure equipment subsequent to acquisition. Any revaluation surplus will be recycled to retained earnings when the equipment is disposed of.a. Determine the appropriate accounting for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. b. Prepare the…arrow_forwardABC Corp., a US corporation, purchased goods on credit from a British company on April 8, 2007. ABC made a payment of 10,000FC on May 8, 2007. The exchange rate was $1= FC .50 on April 8 and $1= FC .60 on May 8. What amount of foreign exchange gain or loss should be recognized on May 8 ?arrow_forwardHonesty Company sold goods on account to a foreign company for 80,200 euros on October 20, 2022. The date of invoice is October 25, 2022 and the payment is due on January 29, 2023. Exchange rates were as follows (see image below). Answer the following subquestion(3): a. How much is the foreign exchange gain (loss) to be reported in 2022? ____________ thanks!arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education