Yang Corporation starts a foreign subsidiary on January 1 by investing 44,000 rand. Yang owns all of the shares of the subsidiary's common stock. The foreign subsidiary generates 88,000 rand of net income throughout the year and pays no dividends. The rand is the foreign subsidiary's functional currency. Currency exchange rates for 1 rand are as follows: January 1 Average for the year December 31 Required: $ 0.25 = 1 rand 0.28 = 1 rand 0.31 = 1 rand In preparing consolidated financial statements, determine the translation adjustment that Yang Corporation will report at the end of the current year. Translation adjustment
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- Yang Corporation starts a foreign subsidiary on January 1 by investing 28,000 rand. Yang owns all of the shares of the subsidiary’s common stock. The foreign subsidiary generates 56,000 rand of net income throughout the year and pays no dividends. The rand is the foreign subsidiary’s functional currency. Currency exchange rates for 1 rand are as follows: January 1 $0.25 = 1 rand Average for the year 0.28 = 1 December 31 0.31 = 1 In preparing consolidated financial statements, what translation adjustment will Yang report at the end of the current year?Yang Corporation starts a foreign subsidiary on January 1 by investing 20,000 rand. Yang owns all of the shares of the subsidiary’s common stock. The foreign subsidiary generates 40,000 rand of net income throughout the year and pays no dividends. The rand is the foreign subsidiary’s functional currency. Currency exchange rates for 1 rand are as follows: January 1. . . . . . . . . . $0.25 = 1 randAverage for the year. . . 0.28 = 1December 31. . . . . .. . . 0.31 = 1 In preparing consolidated financial statements, what translation adjustment will Yang report at the end of the current year? Choose the correct.a. $400 positive (credit).b. $1,000 positive (credit).c. $1,400 positive (credit).d. $2,400 positive (credit).On January 1, Narnevik Corporation formed a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory on account at a cost of 250,000 local currency units (LCU). One-fifth of this inventory remained unsold on December 31, while 30 percent of the account payable had not yet been paid. The U.S. $ per LCU exchange rates were as follows: January 1 . . . . . . . . . . . . . . . $0.60 April 1 . . . . . . . . . . . . . . . . . . 0.58 Average for the current year . . 0.56 December 31 . . . . . . . . ........ . . 0.54 At what amounts should the December 31 balances in inventory and accounts payable be translated into U.S. dollars using the current rate method?
- On January 1, Narnevik Corporation formed a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory on account at a cost of 250,000 local currency units (LCU). One-fifth of this inventory remained unsold on December 31, while 30 percent of the account payable had not yet been paid. The U.S.dollar–per-LCU exchange rates were as follows: January 1 $ 0.60 April 1 0.58 Average for the current year 0.56 December 31 0.54 At what amounts should the December 31 balances in inventory and accounts payable be translated into U.S. dollars using the current rate method?Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash NGN 15,120 Notes payable NGN 20,160 Inventory 10,800 Common stock 20,160 Land 4,080 Retained earnings 10,080 Building 40,800 Accumulated depreciation (20,400 ) NGN 50,400 NGN 50,400 The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: 2020 Feb. 1 Paid 8,080,000 NGN on the note payable. May 1 Sold entire inventory for 16,800,000 NGN on account. June 1 Sold land for 6,080,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,080,000 NGN cash. Oct. 1 Bought inventory for 20,080,000 NGN cash. Nov. 1…Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash NGN 16,800 Notes payable NGN 20,400 Inventory 12,000 Common stock 22,400 Land 4,200 Retained earnings 11,200 Building 42,000 Accumulated depreciation (21,000 ) NGN 54,000 NGN 54,000
- Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash NGN 16,240 Notes payable NGN 20,180 Inventory 10,900 Common stock 21,000 Land 4,090 Retained earnings 10,500 Building 40,900 Accumulated depreciation (20,450 ) NGN 51,680 NGN 51,680 The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: 2020 Feb. 1 Paid 8,090,000 NGN on the note payable. May 1 Sold entire inventory for 16,900,000 NGN on account. June 1 Sold land for 6,090,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,090,000 NGN cash. Oct. 1 Bought inventory for 20,090,000 NGN cash. Nov. 1…Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria, where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash NGN 16,000 Notes payable NGN 20,000 Inventory 10,000 Common stock 20,000 Land 4,000 Retained earnings 10,000 Building 40,000 Accumulated depreciation (20,000 ) NGN 50,000 NGN 50,000 The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: 2020 Feb. 1 Paid 8,000,000 NGN on the note payable. May 1 Sold entire inventory for 16,000,000 NGN on account. June 1 Sold land for 6,000,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,000,000 NGN cash. Oct. 1 Bought inventory for 20,000,000 NGN cash. Nov. 1…Owen Co. Owns a subsidiary in a foreign country whose trial balance in foreign currency unit (FCU) for the last two years follow: December 31,2018 December 31,2019 (in FCU) (in FCU) DEBITS Cash 100,000 80,000 Receivables 450,000 550,000 Inventory 680,000 720,000 Property and equipment (net) 1,000,000 900,000 Cost of goods sold 300,000 270,000 Operating Expenses 25,000 50,000 Miscellaneous Expenses 5,000 25,000 Dividends - 5,000 TOTAL 2,560,000 2,600,000 CREDITS Short-term debts 260,000 340,000 Long-term debts 1,250,000 1,100,000 Common stock 500,000 500,000 Retained earnings, 1/1 - 220,000 Sales 500,000 400,000 Interest income 50,000 40,000 TOTAL 2,560,000 2,600,000 Owen formed the subsidiary on January 1, 2018 when the exchange rated was P30 for 1FCU. The exchange rate for 1FCU on December 31, 2018 had increased to P35 and to P40 on December 31, 2019. Average rate during 2019 is P36. Income is earned evenly over the year.…
- Board Company has a foreign subsidiary that began operations at the start of 2017 with assets of 149,000 kites (the local currency unit) and liabilities of 88,000. During this initial year of operation, the subsidiary reported a profit of 43,000 kites. It distributed two dividends, each for 6,700 kites with one dividend declared on March 1 and the other on October 1. Applicable exchange rates for 1 kite follow: 1/1/17 (start of business) $.75 3/1//17 .73 weighted average rate for 2017 .72 10/1/17 .71 12/31/17 .70 a. Assume that the kite is this subsidiary’s functional currency. What translation adjustment would Board report for the year 2017? b. Assume that on October 1, 2017, Board entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, Board agreed to sell 165,000 kites in three months at a forward exchange rate of $0.71/1 kite. Prepare the journal entries required by this forward contract. 1. record the entry for the…Rolfe Company (a U.S.-based company) has a subsidiary In Nigeria, where the local currency unit is the naira (NGN). On December 31 2023, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash Inventory Land Building Accumulated depreciation NGN 16,240 Notes payable 10,900 Common stock 4,090 Retained earnings 40,900 (20,450) NGN 51,680 NGN 20,180 21,000 10,500 NGN 51,680 The subsidiary Issued the common stock In 2015, and acquired the land and building in 2016. It acquired the Inventory on August 1, 2023. During 2024, the following transactions took place: 2824 February 1 Paid 8,090,000 NGN on the note payable. May 1 June 1 August 1 Sold entire inventory for 16,900,000 NGN on account. Sold land for 6,090,000 NGN cash. Collected all accounts receivable. September 1 Signed long-term note to receive 8,090,000 NGN cash. Bought inventory for 20,090,000 NGN cash. October 1 November 1 December 1 Bought land for 3,090,000 NGN on account. Declared and paid…Board Company has a foreign subsidiary that began operations at the start of 2017 with assets of 132,000 kites (the local currency unit) and liabilities of 54,000 kites. During this initial year of operation, the subsidiary reported a profit of 26,000 kites. It distributed two dividends, each for 5,000 kites with one dividend declared on March 1 and the other on October 1. Applicable exchange rates for 1 kite follow:a. Assume that the kite is this subsidiary’s functional currency. What translation adjustment would Board report for the year 2017?b. Assume that on October 1, 2017, Board entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, Board agreed to sell 200,000 kites in three months at a forward exchange rate of $0.76/1 kite. Prepare the journal entries required by this forward contract.c. Compute the net translation adjustment for Board to report in accumulated other comprehensive income for the year 2017 under this second set of…