Question 14Elan, a U.S. corporation, completed the December 31, 20X8, foreign currency translation of its 70 percent owned Swiss subsidiary's trial balance using the current rate method. The translation resulted in a debit adjustment of $25,000. The subsidiary had reported net income of 800,000 Swiss francs for 20X8 and paid dividends of 50,000 Swiss francs on September 1, 20X8. The translation rates for the year were:January 1, 20X8$0.55=1 francSeptember 1, 20X8$0.59=1 francAverage for 20X8$0.57=1 franc The January 1 balance of the Investment in the Swiss subsidiary account was $1,600,000. Elan acquired its interest in the Swiss subsidiary at book value with no differential or goodwill recorded at acquisition. Elan's Investment in Swiss subsidiary account at December 31, 20X8, is: $1,881,050. $1,916,050. $1,923,950. $2,051,500

Divided income is to be reduced from opening investment value

Answered: Elan, a U.S. corporation, completed the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question 14

Elan, a U.S. corporation, completed the December 31, 20X8, foreign currency translation of its 70 percent owned Swiss subsidiary's trial balance using the current rate method. The translation resulted in a debit adjustment of $25,000. The subsidiary had reported net income of 800,000 Swiss francs for 20X8 and paid dividends of 50,000 Swiss francs on September 1, 20X8. The translation rates for the year were:

January 1, 20X8	$	0.55	=	1 franc
September 1, 20X8	$	0.59	=	1 franc
Average for 20X8	$	0.57	=	1 franc

The January 1 balance of the Investment in the Swiss subsidiary account was $1,600,000. Elan acquired its interest in the Swiss subsidiary at book value with no differential or goodwill recorded at acquisition.

Elan's Investment in Swiss subsidiary account at December 31, 20X8, is:

		$1,881,050.
		$1,916,050.
		$1,923,950.
		$2,051,500

Definition Definition Financial journal in which only cash-related transactions are recorded. Cash transactions are posted chronologically in the cash book, which is also called a subsidiary book. All the cash receipts are recorded on the debit side and all the cash payments are recorded on the credit side. An important point to remember is that the cash book never shows a credit balance; only a debit balance is shown in the cash book.

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