Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2020 with three assets: cash of 22.000 dinars, accounts receivable of 80,800 dinars, and land that cost 208,000 dinars when acquired on April 1, 2019. On January 1, 2020, Zugar has a 158,000 dinar note payable, and no other liabilities. On May 1, 2020, Zugar renders services to a customer for 128,000 dinars, which was immediately paid in cash. On June 1, 2020, Zugar incurred a 108,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow: April 1, 2019 January 1, 2020 May 1, 2020 June 1, 2020 December 31, 2020 $0.41- 0.44 0.45 1 dinar 1 1 1 0.47 0.49 1 a. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is the subsidiary's functional currency. What is the translation adjustment for this subsidiary for the year 2020? b. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the U.S. dollar is the subsidiary's functional currency. What is the remeasurement gain or loss for 2020? c. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2020, balance sheet, what is the translated value of the Land account? On the December 31, 2020, balance sheet, what is the remeasured value of the Land account?
Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2020 with three assets: cash of 22.000 dinars, accounts receivable of 80,800 dinars, and land that cost 208,000 dinars when acquired on April 1, 2019. On January 1, 2020, Zugar has a 158,000 dinar note payable, and no other liabilities. On May 1, 2020, Zugar renders services to a customer for 128,000 dinars, which was immediately paid in cash. On June 1, 2020, Zugar incurred a 108,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow: April 1, 2019 January 1, 2020 May 1, 2020 June 1, 2020 December 31, 2020 $0.41- 0.44 0.45 1 dinar 1 1 1 0.47 0.49 1 a. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is the subsidiary's functional currency. What is the translation adjustment for this subsidiary for the year 2020? b. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the U.S. dollar is the subsidiary's functional currency. What is the remeasurement gain or loss for 2020? c. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2020, balance sheet, what is the translated value of the Land account? On the December 31, 2020, balance sheet, what is the remeasured value of the Land account?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:a. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume
also that the dinar is the subsidiary's functional currency. What is the translation adjustment for this subsidiary for the year 2020?
b. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume
also that the U.S. dollar is the subsidiary's functional currency. What is the remeasurement gain or loss for 2020?
c. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2020, balance sheet, what is the
translated value of the Land account? On the December 31, 2020, balance sheet, what is the remeasured value of the Land
account?
(Input all amounts as positive.)
13
b
lc
Translated value of land
Remeasured value of land
translation adjustment
Transcribed Image Text:Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2020 with three assets: cash of 22.000 dinars,
accounts receivable of 80,800 dinars, and land that cost 208,000 dinars when acquired on April 1, 2019. On January 1, 2020, Zugar
has a 158,000 dinar note payable, and no other liabilities. On May 1, 2020, Zugar renders services to a customer for 128,000 dinars,
which was immediately paid in cash. On June 1, 2020, Zugar incurred a 108,000 dinar operating expense, which was immediately paid
in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow:
April 1, 2019
January 1, 2020
May 1, 2020
June 1, 2020
December 31, 2020
$0.41
0.44
0.45
0.47-
0.49
1 dinar
1
1
1
1
a. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume
also that the dinar is the subsidiary's functional currency. What is the translation adjustment for this subsidiary for the year 2020?
b. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume
also that the U.S. dollar is the subsidiary's functional currency. What is the remeasurement gain or loss for 2020?
e. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2020, balance sheet, what is the
translated value of the Land account? On the December 31, 2020, balance sheet, what is the remeasured value of the Land
account?
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