ADV. ACCT LOOSELEAF W/ CONNECT ACCESS
13th Edition
ISBN: 9781266324857
Author: Hoyle
Publisher: MCG
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Chapter 10, Problem 2DYS
RESEARCH CASE 2—FOREIGN CURRENCY TRANSLATION DISCLOSURES IN THE COMPUTER INDUSTRY
Many companies make annual reports available on their corporate website, often under an Investors tab. Annual reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filings, click Company Filings Search, type in Company Name, and under Filing Type, search for 10-K).
Access the most recent annual report for the following U.S.-based multinational corporations to complete the requirements:
International Business Machines Corporation.
Intel Corporation.
Required
- a. Identify the location(s) in the annual report that provides disclosures related to foreign currency translation and foreign currency hedging.
- b. Determine whether the company’s foreign operations have a predominant functional currency.
- c. Determine the amount of translation adjustment, if any, reported in other comprehensive income in each of the three most recent years. Explain the sign (positive or negative) of the translation adjustment in each of die three most recent years. Compare the relative magnitude of these translation adjustments for the two companies.
- d. Determine whether each company hedges net investments in foreign operations. If so, determine the type(s) of hedging instrument used.
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Assume that your company sells products to a customer located in Switzerland on November 20. The invoice specifies that payment
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Description
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+ ✓ 250,000 x
+ ✓
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# ✓
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0✓
÷ ✓
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Journal entries for an accounts receivable denominated in Swiss Francs ($US strengthens and weakens)
Assume that your company sells products to a customer located in Switzerland on November 20. The invoice specifies that payment is to be made on February 20 in Swiss Francs (CHF) in the amount of CHF 250,000. Your company
operates on a calendar year basis.
Assume the following exchange rates:
November 20 $1.12:1CHF
December 31 $1.09:1CHF
February 20 $1.11:1CHF
Prepare the journal entries to record the sale (ignore cost of goods sold), the required adjusting entry at December 31, and the receipt of payment February 20.
Date
Description
Credit
11/20 Accounts receivable
Sales
12/31 Foreign currency transaction loss
Accounts receivable
2/20 Cash
Accounts receivable
Accounts receivable
→ ✓
✓
✓
+
→
✔
✓
→
Debit
250,000 x
0 ✓
10,000 *
0✔
277,500✔
0✓
0✔
0✔
250,000 *
0✔
10,000 x
0 ✓
277,500 *
0 x
18 - What is the journal entry to be made if the policies sent by the exporter are accepted by the importer in the form of payment with acceptance credit?A) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT
121 02 RECEIVABLES-FC XX
601 01 FOREIGN GOODS SALES XX
B) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT
120 02 FOREIGN BUYER XX
601 01 FOREIGN GOODS SALES XX
C) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT
120 02 FOREIGN BUYER XX
121 02 RECEIVABLES-FC XX
D) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT
121 02 RECEIVABLES-FC XX
120 02 FOREIGN BUYER XXE) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT
102 02 BANK X DTH XX
121 02 RECEIVABLES-FC XX
Chapter 10 Solutions
ADV. ACCT LOOSELEAF W/ CONNECT ACCESS
Ch. 10 - Prob. 1QCh. 10 - What causes balance sheet (or translation)...Ch. 10 - Prob. 3QCh. 10 - Prob. 4QCh. 10 - Prob. 5QCh. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - Prob. 8QCh. 10 - Prob. 9QCh. 10 - Prob. 10Q
Ch. 10 - Prob. 11QCh. 10 - Which translation method does U.S. GAAP require...Ch. 10 - Prob. 13QCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - What amount does Newberrys consolidated income...Ch. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Prob. 17PCh. 10 - A foreign subsidiarys functional currency is its...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - The following accounts are denominated in rubles...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Sullivans Island Company began operating a...Ch. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - The following account balances are for the Agee...Ch. 10 - Prob. 35PCh. 10 - Prob. 36PCh. 10 - Prob. 37PCh. 10 - Prob. 38PCh. 10 - Prob. 1DYSCh. 10 - RESEARCH CASE 2FOREIGN CURRENCY TRANSLATION...Ch. 10 - Prob. 3DYSCh. 10 - Prob. 4DYSCh. 10 - Prob. 5DYS
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