Bentley Company owns a subsidiary in India whose balance sheets in rupees (R) for the last two years follow: December 31, 20X6 December 31, 20X7 Assets: Cash Receivables Inventory Fixed Assets, net Total Assets Equities: Current Payables Long-Term Debt Common Stock Retained Earnings Total Equities R 119,000 455,000 684,000 1,013,000 R 2,271,000 R 94,000 553,000 739,000 917,000 R 2,303,000 344,000 1,139,000 275,000 1,269,000 506,000 506,000 314,000 221,000 R 2,271,000 R 2,303,000 Bentley formed the subsidiary on January 1, 20X6, when the exchange rate was 30 rupees for 1 U.S. dollar. The exchange rate for 1 U.S. dollar on December 31, 20X6, and December 31, 20X7, had increased to 35 rupees and 40 rupees, respectively. Income is earned evenly over the year, and the subsidiary declared no dividends during its first two years of existence. Required: a. Present both the direct and the indirect exchange rates for the rupees for the three dates of (1) January 1, 20X6; (2) December 31, 20X6; and (3) December 31, 20X7. b. Prepare the subsidiary's translated balance sheet as of December 31, 20X6, assuming the rupee is the subsidiary's functional currency. c. Prepare the subsidiary's translated balance sheet as of December 31, 20X7, assuming the rupee is the subsidiary's functional currency.
Bentley Company owns a subsidiary in India whose balance sheets in rupees (R) for the last two years follow: December 31, 20X6 December 31, 20X7 Assets: Cash Receivables Inventory Fixed Assets, net Total Assets Equities: Current Payables Long-Term Debt Common Stock Retained Earnings Total Equities R 119,000 455,000 684,000 1,013,000 R 2,271,000 R 94,000 553,000 739,000 917,000 R 2,303,000 344,000 1,139,000 275,000 1,269,000 506,000 506,000 314,000 221,000 R 2,271,000 R 2,303,000 Bentley formed the subsidiary on January 1, 20X6, when the exchange rate was 30 rupees for 1 U.S. dollar. The exchange rate for 1 U.S. dollar on December 31, 20X6, and December 31, 20X7, had increased to 35 rupees and 40 rupees, respectively. Income is earned evenly over the year, and the subsidiary declared no dividends during its first two years of existence. Required: a. Present both the direct and the indirect exchange rates for the rupees for the three dates of (1) January 1, 20X6; (2) December 31, 20X6; and (3) December 31, 20X7. b. Prepare the subsidiary's translated balance sheet as of December 31, 20X6, assuming the rupee is the subsidiary's functional currency. c. Prepare the subsidiary's translated balance sheet as of December 31, 20X7, assuming the rupee is the subsidiary's functional currency.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bentley Company owns a subsidiary in India whose balance sheets in rupees (R) for the last two years follow:
December 31,
20X6
December 31,
20X7
Assets:
Cash
Receivables
Inventory
Fixed Assets, net
Total Assets
Equities:
Current Payables
Long-Term Debt
Common Stock
Retained Earnings
Total Equities
R 119,000
455,000
684,000
1,013,000
R 2,271,000
R 94,000
553,000
739,000
917,000
R 2,303,000
Check my work
275,000
344,000
1,269,000
1,139,000
506,000
221,000
506,000
314,000
R 2,271,000 R 2,303,000
Bentley formed the subsidiary on January 1, 20X6, when the exchange rate was 30 rupees for 1 U.S. dollar. The exchange
rate for 1 U.S. dollar on December 31, 20X6, and December 31, 20X7, had increased to 35 rupees and 40 rupees,
respectively. Income is earned evenly over the year, and the subsidiary declared no dividends during its first two years of
existence.
Required:
a. Present both the direct and the indirect exchange rates for the rupees for the three dates of (1) January 1, 20X6; (2)
December 31, 20X6; and (3) December 31, 20X7.
b. Prepare the subsidiary's translated balance sheet as of December 31, 20X6, assuming the rupee is the subsidiary's
functional currency.
c. Prepare the subsidiary's translated balance sheet as of December 31, 20X7, assuming the rupee is the subsidiary's
functional currency.
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VIEWStep 3: b. Preparation of the subsidiary translated balance sheet as of December 31, 2016
VIEWStep 4: c. Preparation of the subsidiary translated balance sheet as of December 31, 2017
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