HelpavedSave & ExitSubmitThe Simpson Corporation is calculating theiradjusted balance sheet into U.S. Dollars. Theexchange rate at the beginning of the year was $1Euro = $1 U.S. dollar. The current exchange rate is80 Euros to $1.00. Net Income for the year waszero. How much is the accounting gain/loss due toof 3the exchange rate change?Beginning Balance Sheet:• Assets = 3,000 Euros%3DEquity = 1,500 Euros• Liabilities = 1,500 Euros%3Ded

The current exchange rate is 0.80 Euros to 1 Dollar. This means 1 Euro is equals to (1/0.80)…

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A U.S. firm has total assets valued at €827,000 located in Germany. This valuation did not change from last year. Last year, the exchange rate was €.9473/$. Today, the exchange rate is €.8997/$. By what amount did these assets change in value on the firm's U.S. financial statements? Multiple Choice −$46,187.79 −$39,365.20 $39,365.20 $46,187.79 $0
A Katz Corporation subsidiary buys marketable equity securities and inventory on April 1, 2024, for 100,000 won each. It pays for both items on June 1, 2024, and they are still on hand at year-end. Inven- tory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange rates in 2024 follow: January 1 April 1 June 1 December 31 ...... $0.15 1 won 0.16 = 1 0.17 = 1 0.19 = 1 10. Assume that the won is the subsidiary's functional currency. What balances does a consolidated balance sheet report as of December 31, 2024? a. Marketable equity securities = $16,000 and Inventory = $16,000 b. Marketable equity securities = $17,000 and Inventory = $17,000 c. Marketable equity securities = $19,000 and Inventory = $16,000 d. Marketable equity securities = $19,000 and Inventory = $19,000 11. Assume that the U.S. dollar is the subsidiary's functional currency. What balances does a consoli- dated balance sheet report as of December 31, 2024? a. Marketable equity securities =…
2. Assume that a FARFAR subsidiary of the U.S. MNC operates in a highly inflationary economy and keeps its balance sheet in FFAD currency. The U.S. dollar is the reporting currency of the U.S. MNC. The following table presents the balance sheet in FAAD. The subsidiary is at the end of its first year of operation. The historical exchange rate is FAAD1.60/$1.00 and the most recent exchange rate is FAAD2.00/$1.00 while the weighted average exchange rate is FAAD1.80/$1.00. The current price index is 105 at the acquisition date while the price index is 175 at the end of the reporting period. Fill out the missing entries for this FARFAR subsidiary under FASB52 of the GAAP and IAS 29 of the IFRS. (Hint: Inventory is carried at the current value on the book) Balance Sheet 1Cash Inventory (current Value = FAAD1,800) 3Net fixed assets 2 4Total Assets 5Current liabilities 6Long-term debt 7Common stock 8Retained earnings 9Total L&E Local Currency FFAD 2,100 FAAD 1,500 FAAD 3,000 FAAD 6,600 FAAD…
Required information McCarthy, Inc.'s Brazilian subsidiary borrowed 115,000 euros on January 1, 2017. Exchange rates between the Brazilian real (BRL) and euro (€) and between the U.S. dollar ($) and BRL are as follows: US$ per BRL $ 0.28 $ 0.25 $ 0.20 BRL per €. BŘL 4.20 January 1, 2017 Average, 2017 December 31, 2017 BRL 4.30 BRL 4.60 05 a017
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L ast year Leather Boot, Inc. had investments in Paris worth 470,000 euros. At that time, the euro was worth $1.14. Today the euro is trading for $1.28. What is the gain or loss in value of the inventory expressed in dollars and in euros? Use a minus sign to enter the amount as a negative value. Round your answers to the nearest whole number. If your answer is zero, enter “0”. Net gain/loss in dollars: $ Net gain/loss in euros: €
None
Stuff Inc., a U.S. company, imported goods for 50,000 euro on Dec. 10, Year 1 and paid for them on Jan. 10. Year 2. The following exchange rates were applicable in Years 1 and 2: Exchange Rate Date Dec. 10, Yr. 1 Dec 31, Yr 1 Jan 10, Yr. 2 What approximate gain or loss will Stuff book on Jan. 10, Year 2? OA gain of $3,000. OA loss of $3,000 O Again of $5,500 OA loss of $5,500. 0.79 € 0.82 € 0.75 €
None
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Cassowary Corporation’s balance sheet at December 31, 2016 included a $20,400 account receivable from Quail Corporation of Australia. The account receivable is denominated as 30,000 Australian dollars (A$). Assuming no entries have been made since 12/31/2016, what single entry should Cassowary make on January 16, 2017 when the account receivable is collected and the exchange rate for A$ is $.67? Select one: a. Cash (fc) 20,100 Accounts Receivable (fc) 20,100 b. Cash (fc) 20,100 Exchange Loss 300 Accounts Receivable (fc) 20,400 c. Cash (fc) 20,400 Accounts Receivable (fc) 20,400 d. Cash (fc) 20,700 Accounts Receivable (fc) 20,400 Exchange Gain 300

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