Question 5 On January 1, 20x1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows: Debit (SFr) 7000 Credit (SFr) Cash Accounts Receivable 20000 Receivable from Popular Creek Inventory Plant and Equipment Accumulated Depreciation Accounts Payable 5000 25000 100000 10000 12000 Bonds Payable 50000 Common Stock Sales 60000 150000 Cost of goods sold Depreciation Expense Operating Expense Dividend paid 70000 10000 30000 15000 Total SFF282,000 SFr 282,000 Additional Information The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to RoadTime. 1. 2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1. 3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1. The dividends were declared and paid on November 1. 4. 5. Exchange rates were as follows: 1SFr=$.73 1SFF=$.74 1SFr=$.77 1SFr=$.80 1SFr=$.75 January 1 March 1 November 1 December 31 20X1 Average 6. The Swiss franc is the functional currency. Required (a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars. (b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary?

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Question 5
On January 1, 20x1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an
initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows:
Debit (SFr)
Credit (SFr)
Cash
7000
Accounts Receivable
20000
Receivable from Popular Creek
5000
25000
Inventory
Plant and Equipment
Accumulated Depreciation
Accounts Payable
Bonds Payable
100000
10000
12000
50000
Common Stock
60000
Sales
150000
Cost of goods sold
Depreciation Expense
Operating Expense
Dividend paid
70000
10000
30000
15000
Total
SFF282,000
SFr 282,000
Additional Information
1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to
RoadTime.
2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased
November 1.
3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's
depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4. The dividends were declared and paid on November 1.
5. Exchange rates were as follows:
1SFF=$.73
1SFF=$.74
January 1
March 1
November 1
1SFF=$.77
December 31
1SFr=$,80
20X1 Average
1SFF=$.75
6. The Swiss franç is the functional currency.
Required
(a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars.
(b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its
foreign subsidiary?
Transcribed Image Text:Question 5 On January 1, 20x1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows: Debit (SFr) Credit (SFr) Cash 7000 Accounts Receivable 20000 Receivable from Popular Creek 5000 25000 Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Bonds Payable 100000 10000 12000 50000 Common Stock 60000 Sales 150000 Cost of goods sold Depreciation Expense Operating Expense Dividend paid 70000 10000 30000 15000 Total SFF282,000 SFr 282,000 Additional Information 1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to RoadTime. 2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1. 3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1. 4. The dividends were declared and paid on November 1. 5. Exchange rates were as follows: 1SFF=$.73 1SFF=$.74 January 1 March 1 November 1 1SFF=$.77 December 31 1SFr=$,80 20X1 Average 1SFF=$.75 6. The Swiss franç is the functional currency. Required (a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars. (b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary?
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