Example 1: Kennedy Inc. is a US based MNC that conduct a part of its business in Oman. Its Omani sales are denominated in Omani Riyal. Its income statement from Oman business at the year-end is shown below: Income Statement Particulars Amount in OMR Sales 25000 Less: Cost of goods sold 8000 Gross Profit 17000 Operating expenses 11000 EBIT 6000 Interest Expenses 2000 EBT 4000 Exchange Rates: (a) The spot exchange rate = OMR 0.3850/USD (b) The average exchange rate = OMR 0.3780/USD (c) The historical exchange rate = OMR 0.3820/USD Requirement: Translate income statement into reporting currency by using the current rate method and temporal method.

Example 1: Kennedy Inc. is a US based MNC that conduct a part of its business in Oman. Its Omani sales are denominated in Omani Riyal. Its income statement from Oman business at the year-end is shown below: Income Statement Particulars Amount in OMR Sales 25000 Less: Cost of goods sold 8000 Gross Profit 17000 Operating expenses 11000 EBIT 6000 Interest Expenses 2000 EBT 4000 Exchange Rates: (a) The spot exchange rate = OMR 0.3850/USD (b) The average exchange rate = OMR 0.3780/USD (c) The historical exchange rate = OMR 0.3820/USD Requirement: Translate income statement into reporting currency by using the current rate method and temporal method.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter9: Taxation Of International Transactions

Section: Chapter Questions

Problem 27P

See similar textbooks

Similar questions

Translate into dollars the balance sheet of Nevada Leather Goods' Spanish subsidiary. When Nevada Leather Goods acquired the foreign subsidiary, a euro was worth $1.07. The current exchange rate is $1.36. During the period when retained earnings were earned, the average exchange rate was $1.18 per euro. E (Click the icon to view the financial data.) Requirement During the period covered by this situation, which currency was stronger, the dollar or the euro? 870,000 Assets Liabilities 560,000 Shareholders' equity Share capital 75,000 Retained earnings 235,000 Foreign-currency translation adjustment 870,000 During this period, the was stronger than the V The V produced the V translation adjustment. Choose from any list or enter any number in the input fields and then continue to the next question.
A7
Iberico plc, a Spanish firm whose functional currency is EUR, sold goods to a British customer for 10,000 GBP on credit. The exchange rate on the date of sale was 1 GBP = 1.2 EUR. Which the journal entry shall Iberico plc prepare regarding the sale? a. DR Cash 12,000 EUR, CR Sale 12,000 EUR b. DR Receivable 10,000 GBP, CR Sale 10,000 GBP c. DR Cash 10,000 GBP, CR Sale 10,000 GBP d. DR Receivable 12,000 EUR, CR Sale 12,000 EUR
On March 1, Laton Products (a U.S. firm) purchased manu-facturing inputs from a Mexican supplier for 20,000 pesos, payable on June 1. The exchange rate for pesos on March 1was $0.17. If the exchange rate increases to $0.19 on June 1,what amount of gain or loss would be reported by Latonrelated to the currency exchange?a. $400 gain.b. $200 loss.c. $400 loss.d. $200 gain.
Question 1: (a) A merchant in the UK has agreed to sell goods to an importer in the USA at an invoice price of $130,000. Of this amount, $40,000 will be payable on shipment, $60,000 one month after shipment and $30,000 three months after shipment. The quoted foreign exchange rates ($ per £) at the date of shipment are as follows: Spot rate (on shipment) Forward rate-(one month after) Forward rate-(three months after) 1.690 -1.692 1.687 -1.690 1.680 -1.684 The merchant decides to enter forward exchange contracts through his bank to hedge these transactions for fear that the future spot rates may change to his disadvantage. i. Required: ii. State what are the presumed advantages of using forward exchange contracts. iii. Calculate the sterling amount that the merchant would receive on these contracts.
Company X is a U.S.-based IT company with operations and earnings in a number of foreign countries. The company's profits by subsidiary, in local currency (in millions), are shown in the following table for 2019 and 2020. Net Income Japanese Subsidiary Britih Subsidiary 2019 JPY 200 GBP 100.00 2020 JPY 1,480 GBP 108.40 The average exchange rate for each year, by currency pairs, is the following. Exchange Rate USD = 1 GBP JPY = 1 USD 2019 97.57 1.5646 2020 90.88 1.6473 Use the above data, Students answer the following questions. a. What is Company X's consolidated profits in U.S. dollars in 2019 and 2020? b. If the same exchange rates are used for both years, what is the change in corporate earnings on a "constant currency" basis? c. Using the results of the constant currency analysis in part b, is it possible to separate Company X's growth in earnings between local currency earnings and foreign exchange rate impacts on a consolidated basis?
Example 2: Pepsi Refreshment Company is Omani affiliate of US Refreshment Company. Its balance sheet at year end is shown below: Balance Sheet Assets Amounts in OMR Liabilities Amounts in OMR Cash 10000 Accounts payable 6000 Accounts receivables 22000 Long-term debts 16000 Inventory 32000 Capital Stock 62000 Plant and Equipment 20000   Total 84000 Total 84000 The current exchange rate is USD 2.5900/OMR The historical exchange rate is USD 2.6074/OMR Requirement: Translate the balance sheet into US dollars by using the current rate method and temporal method.
6-Orange Incorporation is a US-based MNC that conducts a part of its business in Oman. The transactions are denominated in Omani Rials. The following details are extracted from the books of Orange incorporation in Oman Sales RO 150,000, Cost of goods sold RO 45,000, Operating expenses RO 24,000, Depreciation expenses RO 10,000. The historical exchange rate OMR 2/USD, The average exchange rate = OMR 3/USD, The spot exchange rate OMR 1.5/USD. Translate the above details into reporting currency by using the current and non-current method and find the translated net profit/loss from the following options. a. Converted net profit is USD 22,000 b. Converted net loss is USD 22,000 c. Converted net loss is USD 32,000 d. None of the options
A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2020: Cost of goods sold LCU 5,590,000 Beginning inventory 548,000 Ending inventory 609,000 The average exchange rate during 2020 was $1.30 = LCU 1. The beginning inventory was acquired when the exchange rate was $1.10 = LCU 1. Ending inventory was acquired when the exchange rate was $1.40 = LCU 1. The exchange rate at December 31, 2020, was $1.45 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost of goods sold be reflected in the U.S. dollar income statement?
Calculate the triangular arbitrage profit from the information provided if you have$1,000,000. Singapore dollar - US dollar spot exchange rate is S$1.8/$, Pound - US dollar£1.33/$ and the SS/£ 1.12.A. $1.607.142.86B. S208,378.09C. $1.208.378.09D. $1,800,000
A U.S. company's foreign subsidiary had the following amounts in stickles (5), the functional currency, in 2018: Cost of goods sold $12,000, e00 Ending inventory Beginning inventory 600,000 240,000 The average exchange rate during 2018 was 81 = $.96. The beginning inventory was acquired when the exchange rate was §1 = $1.20. The ending inventory was acquired when the exchange rate was §1 = $.90. The exchange rate at December 31, 2018 was §1= $.84. Assuming that the foreign nation for the subsidiary had a highly inflationary economy, at what amount should that foreign subsidiary's purchases have been reflected in the 2018 U.S. dollar income statement? Multiple Cholce $11,865,600. $11.577,600. $11.520.000. $11,613,600. $11,523,600.
Subject :- Accounting

SEE MORE QUESTIONS

Recommended textbooks for you

SWFT Corp Partner Estates Trusts

Accounting

ISBN:

9780357161548

Author:

Raabe

Publisher:

Cengage

International Financial Management

Finance

ISBN:

9780357130698

Author:

Madura

Publisher:

Cengage

SWFT Corp Partner Estates Trusts

Accounting

ISBN:

9780357161548

Author:

Raabe

Publisher:

Cengage

International Financial Management

Finance

ISBN:

9780357130698

Author:

Madura

Publisher:

Cengage

SEE MORE TEXTBOOKS

GET THE APP

About FAQ Academic Integrity Sitemap Document Sitemap

Contact Bartleby Contact Research (Essays)High School Textbooks Literature Guides Concept Explainers by Subject Essay Help Mobile App

GET THE APP

Privacy

Your CA Privacy Rights

Your NV Privacy Rights

About Ads

Manage My Data

bartleby, a Learneo, Inc. business

Particulars	Amount in OMR
Sales	25000
Less: Cost of goods sold	8000
Gross Profit	17000
Operating expenses	11000
EBIT	6000
Interest Expenses	2000
EBT	4000