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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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

  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:

  6. The Swiss franc is the functional currency.

  7. 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? 

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 ||| | |||
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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