a. Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2020? The December 31, 2019, U.S. dollar-translated balance sheet reported retained earnings of $52,600, which included a remeasurement loss of $12,200. b. Assuming the foreign currency is the functional currency, what is the translation adjustment for 2020? The December 31, 2019, U.S. dollar-translated balance sheet reported retained earnings of $80,000 and a cumulative translation adjustment of $2,000 (credit balance). (For all requirements, input all answers as positive.) a. Remeasurement Translation b. adjustment gain positive

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Question

Subject: accounting 

 

 

The following account balances are for the Agee Company as of January 1, 2020, and December 31, 2020. All amounts
are denominated in kroner (Kr).
Accounts payable
Accounts receivable
O
Accumulated depreciation-
buildings
Accumulated depreciation-
equipment
Bonds payable-due 2023
Buildings
Cash
Common stock
Depreciation expense
Dividends (10/1/20)
Equipment
Gain on sale of building
Rent expense
Retained earnings.
Salary expense
Sales
Utilities expense
2013
2014
January 1,
2020
April 1, 2020
July 1, 2020
October 1,
2020
December 31,
2020
Average for
2020
$2.40
2.20
2.50
2.60
2.80
2.90
Relevant exchange rates for 1 Kr were as follows:
3.00
2.70
January 1,
2020
(18,000)
35,000
(20,000)
0
(50,000)
118,000
35,000
(70,000)
Additional Information
Agee issued additional shares of common stock during the year on April 1, 2020. Common stock at January 1, 2020,
was sold at the start of operations in 2013.
• Agee purchased buildings in 2014 and sold one building with a book value of Kr 16,000 on July 1 of the current year.
Equipment was acquired on April 1, 2020.
O
a. Remeasurement gain
Translation
lb.
adjustment
positive
0
0
0
(30,000)
0
0
0
(For all requirements, input all answers as positive.)
0
0
December 31,
2020
(24,000)
79,000
(25,000)
(5,000)
(50,000)
97,000
8,000
(80,000)
15,000
32,000
30,000
(6,000)
14,000
(30,000)
20,000
a. Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2020? The December
31, 2019, U.S. dollar-translated balance sheet reported retained earnings of $52,600, which included a
remeasurement loss of $12,200.
(80,000)
5,000
b. Assuming the foreign currency is the functional currency, what is the translation adjustment for 2020? The December
31, 2019, U.S. dollar-translated balance sheet reported retained earnings of $80,000 and a cumulative translation
adjustment of $2,000 (credit balance).
Transcribed Image Text:The following account balances are for the Agee Company as of January 1, 2020, and December 31, 2020. All amounts are denominated in kroner (Kr). Accounts payable Accounts receivable O Accumulated depreciation- buildings Accumulated depreciation- equipment Bonds payable-due 2023 Buildings Cash Common stock Depreciation expense Dividends (10/1/20) Equipment Gain on sale of building Rent expense Retained earnings. Salary expense Sales Utilities expense 2013 2014 January 1, 2020 April 1, 2020 July 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 $2.40 2.20 2.50 2.60 2.80 2.90 Relevant exchange rates for 1 Kr were as follows: 3.00 2.70 January 1, 2020 (18,000) 35,000 (20,000) 0 (50,000) 118,000 35,000 (70,000) Additional Information Agee issued additional shares of common stock during the year on April 1, 2020. Common stock at January 1, 2020, was sold at the start of operations in 2013. • Agee purchased buildings in 2014 and sold one building with a book value of Kr 16,000 on July 1 of the current year. Equipment was acquired on April 1, 2020. O a. Remeasurement gain Translation lb. adjustment positive 0 0 0 (30,000) 0 0 0 (For all requirements, input all answers as positive.) 0 0 December 31, 2020 (24,000) 79,000 (25,000) (5,000) (50,000) 97,000 8,000 (80,000) 15,000 32,000 30,000 (6,000) 14,000 (30,000) 20,000 a. Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2020? The December 31, 2019, U.S. dollar-translated balance sheet reported retained earnings of $52,600, which included a remeasurement loss of $12,200. (80,000) 5,000 b. Assuming the foreign currency is the functional currency, what is the translation adjustment for 2020? The December 31, 2019, U.S. dollar-translated balance sheet reported retained earnings of $80,000 and a cumulative translation adjustment of $2,000 (credit balance).
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For Step 3 (Answer B), Why do we not deduct 2020 depreciation expense to work out translation adkustment?

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