1.On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows: Additional Information The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to RoadTime. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1. The dividends were declared and paid on November 1. Exchange rates were as follows: The Swiss franc is the functional currency. anuary 1 1SFr=$.73 March 1 1SFr=$.74 November 1 1SFr=$.77 December 31 1SFr=$.80 20X1 Average 1SFr=$.75 Required (a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars. (b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary?
1.On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows: Additional Information The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to RoadTime. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1. The dividends were declared and paid on November 1. Exchange rates were as follows: The Swiss franc is the functional currency. anuary 1 1SFr=$.73 March 1 1SFr=$.74 November 1 1SFr=$.77 December 31 1SFr=$.80 20X1 Average 1SFr=$.75 Required (a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars. (b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
1.On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1,
Additional Information
-
The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to RoadTime.
-
Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
-
Equipment is
depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1. -
The dividends were declared and paid on November 1.
-
Exchange rates were as follows:
-
The Swiss franc is the functional currency.
-
anuary 1
1SFr=$.73
March 1
1SFr=$.74
November 1
1SFr=$.77
December 31
1SFr=$.80
20X1 Average
1SFr=$.75
Required
(a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars.
(b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary?
Transcribed Image Text:Debit (SFr).
Credit (SFr)
Cash
7000
Accounts Receivable
Receivable from Popular Creek
Inventory
Plant and Equipment
Accumulated Depreciation
Accounts Payable
Bonds Payable
Common Stock
20000
5000
25000
100000
10000
12000
50000
60000
150000
Sales
Cost of goods sold
Depreciation Expense
Operating Expense
Dividend paid
70000
10000
30000
15000
Total
SFF282,000
SFr 282,000
Additional Information
1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to
RoadTime.
2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased
November 1.
3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's
depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4. The dividends were declared and paid on November 1.
5. Exchange rates were as follows:
January 1
1SFF-D$.73
1SFF=$.74
1SFR-$.77
1SFF3$.80
1SFF3$.75
March 1
November 1
December 31
20X1 Average
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