The following account balances are for the Agee Company as of January 1, 2020, and December 31, 2020. All amounts are denominated in kroner (Kr). Accounts payable Accounts receivable Accumulated depreciation-buildings Accumulated depreciation-equipment Bonds payable-due 2023 Buildings Cash Common stock Depreciation expense Dividends (10/1/20) Equipment Gain on sale of building Rent expense Retained earnings Salary expense Sales Utilities expense January 1, 2020 (24,000) 45,000 (36,000) @ (55,000) 125,000 51,000 (60,000) @ (46,000) December 31, 2020 (31,500) 95,000 (41,000) (6,600) (55,000) 100,500 9,600 (71,000) 31,000 48,000 46,000 (7,600) 18,100 (46,000) 36,000 (133,000) 7,500
The following account balances are for the Agee Company as of January 1, 2020, and December 31, 2020. All amounts are denominated in kroner (Kr). Accounts payable Accounts receivable Accumulated depreciation-buildings Accumulated depreciation-equipment Bonds payable-due 2023 Buildings Cash Common stock Depreciation expense Dividends (10/1/20) Equipment Gain on sale of building Rent expense Retained earnings Salary expense Sales Utilities expense January 1, 2020 (24,000) 45,000 (36,000) @ (55,000) 125,000 51,000 (60,000) @ (46,000) December 31, 2020 (31,500) 95,000 (41,000) (6,600) (55,000) 100,500 9,600 (71,000) 31,000 48,000 46,000 (7,600) 18,100 (46,000) 36,000 (133,000) 7,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Question
Transcribed Image Text:The following account balances are for the Agee Company as of January 1, 2020, and December 31, 2020. All amounts are
denominated in kroner (Kr).
Accounts payable
Accounts receivable
Accumulated depreciation-buildings
Accumulated depreciation-equipment
Bonds payable-due 2023
Buildings
Cash
Common stock
Depreciation expense
Dividends (10/1/20)
Equipment
Gain on sale of building.
Rent expense
Retained earnings
Salary expense
Sales
Utilities expense
Relevant exchange rates for 1 Kr were as follows:
2013
2014
January 1, 2020
April 1, 2020
July 1, 2020
October 1, 2020
December 31, 2020
Average for 2020
$ 2.45
2.25
2.55
2.65
2.85
2.95
3.05
2.75
January 1, 2020
(24,000)
45,000
(36,000)
0
Additional Information
• Agee issued additional shares of common stock during the year on April 1, 2020. Common stock at January 1, 2020, was sold at the
start of operations in 2013.
(For all requirements, input all answers as positive.)
8.
Remeasurement
b. Translation adjustment
• Agee purchased buildings in 2014 and sold one building with a book value of Kr 5,100 on July 1 of the current year.
• Equipment was acquired on April 1, 2020.
(55,000)
125,000
51,000
(60,000)
gain
positive
0
0
8
0
0
(46,000)
0
0
8
Answer is complete but not entirely correct.
✓ S 12,860
$
December 31, 2020
(31,500)
95,000
65,440 x
(41,000)
(6,600)
(55,000)
100,500
a. Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2020? The December 31, 2019, U.S.
dollar-translated balance sheet reported retained earnings of $96,600, which included a remeasurement loss of $13,000.
b. Assuming the foreign currency is the functional currency, what is the translation adjustment for 2020? The December 31, 2019, U.S.
dollar-translated balance sheet reported retained earnings of $112,500 and a cumulative translation adjustment of $10,800 (credit
balance).
9,600
(71,000)
31,000
48,000
46,000
(7,600)
18,100
(46,000)
36,000
(133,000)
7,500
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