Answered: Prepare a Translated Income Statement…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 39E: Cuneo Companys income statements for the last 3 years are as follows: Refer to the information for...

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Question

Entity A is a stand-alone entity (it is not part of a group). Its functional currency is CU. However, Entity A is required by law to present its financial statements in USD, which is the local currency of the country in which it operates. Entity A has a 31 December financial year-end.

The exchange rates:

at 31 December 20X1 and 31 December 20X2 are CU1 = USD2 and CU1 = USD2.2 respectively.
In 20X2 Entity A paid a dividend of CU3,000 when the rate of exchange was CU1 = USD2.25.
The share capital was issued when the exchange rate was CU1 = USD1.8.

Statement of comprehensive income for the year ended 31 December 20X2

Notes · The weighted average exchange rate for the year ended 31 December 20X1 is CU1 = USD1.9.

Required:

Prepare a Translated Income Statement using USD currency showing the Translated Profit for the year.
If the Translation difference converting from CU TO USD IS 12,700, what is the Total Comprehensive Income for the year ended 20X2?

Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other expenses
Finance costs
Profit before tax
Income tax expense
Profit for the year
Extract from the statement of changes in equity
Retained earnings at the beginning of year
Profit for the year
Dividends
Retained earnings at end of year
146,114
(113,969)
32,145
(150)
(9,000)
(1,000)
(3,000)
18,995
(4,495)
14,500
18,000
14,500
(3,000)
29,500

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