On January 1, 2015 FAREWELL CORPORATION organized GOODLUCK Company as subsidiary in Australia with an initial investment cost $ 157,500. GOODLUCK Company's December 31, 2015, trial balance in Australian dollars is as follows: Debit $ 18,375 52,500 13,125 65,625 262,500 Credit Cash and cash equivalents Trade receivables, net Due from Farewell Inventory Machinery and equipment Accumulated depreciation Accounts payable Mortgage bonds payable Ordinary shares Sales Cost of goods sold Selling expenses Depreciation expense Dividends declared ТОTAL Additional information: a. Purchases of merchandise are made evenly throughout the year. Items in the ending inventory were purchased July 1. b. Machinery and equipment are depreciated by the straight line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on April 1. c. The dividends were declared and paid on October 1. d. The exchange rates were as follows: January 1 April 1 July 1 $ 26,250 31,500 131,250 157,500 393,750 183,750 78,750 26,250 39,375 $ 740,250 $ 740,250 P 35.50 35.25 35.60 P 35.40 35.00 35.30 October 1 December 31 Average 2015 20. How much is the cumulative translation adjustment in 2015? a. P 94,500 loss b. P 94,500 gain c. P114,187.50 loss d. P114,187.50 gain

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2015 FAREWELL CORPORATION organized GOODLUCK Company as
subsidiary in Australia with an initial investment cost $ 157,500. GOODLUCK Company's
December 31, 2015, trial balance in Australian dollars is as follows:
Debit
Credit
|Cash and cash equivalents
Trade receivables, net
Due from Farewell
Inventory
Machinery and equipment
Accumulated depreciation
Accounts payable
Mortgage bonds payable
Ordinary shares
Sales
Cost of goods sold
Selling expenses
Depreciation expense
Dividends declared
ТОTAL
Additional information:
a. Purchases of merchandise are made evenly throughout the year. Items in the ending
inventory were purchased July 1.
b. Machinery and equipment are depreciated by the straight line method with a 10-year life
and no residual value. A full year's depreciation is taken in the year of acquisition. The
equipment was acquired on April 1.
c. The dividends were declared and paid on October 1.
d. The exchange rates were as follows:
January 1
April 1
July 1
$ 18,375
52,500
13,125
65,625
262,500
$ 26,250
31,500
131,250
157,500
393,750
183,750
78,750
26,250
39,375
$ 740,250
$ 740,250
P 35.50
35.25
October 1
December 31
P 35.40
35.00
35.30
35.60
Average 2015
20. How much is the cumulative translation adjustment in 2015?
a. P 94,500 loss
b. Р 94,500 gain
c. P114,187.50 loss
d. P114,187.50 gain
Transcribed Image Text:On January 1, 2015 FAREWELL CORPORATION organized GOODLUCK Company as subsidiary in Australia with an initial investment cost $ 157,500. GOODLUCK Company's December 31, 2015, trial balance in Australian dollars is as follows: Debit Credit |Cash and cash equivalents Trade receivables, net Due from Farewell Inventory Machinery and equipment Accumulated depreciation Accounts payable Mortgage bonds payable Ordinary shares Sales Cost of goods sold Selling expenses Depreciation expense Dividends declared ТОTAL Additional information: a. Purchases of merchandise are made evenly throughout the year. Items in the ending inventory were purchased July 1. b. Machinery and equipment are depreciated by the straight line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on April 1. c. The dividends were declared and paid on October 1. d. The exchange rates were as follows: January 1 April 1 July 1 $ 18,375 52,500 13,125 65,625 262,500 $ 26,250 31,500 131,250 157,500 393,750 183,750 78,750 26,250 39,375 $ 740,250 $ 740,250 P 35.50 35.25 October 1 December 31 P 35.40 35.00 35.30 35.60 Average 2015 20. How much is the cumulative translation adjustment in 2015? a. P 94,500 loss b. Р 94,500 gain c. P114,187.50 loss d. P114,187.50 gain
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