Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 10, Problem 31P
a.
To determine
What translation adjustment would board report in financial statement when kite is a functional currency.
b.
To determine
Prepare
c.
To determine
Compute the net translation adjustment in sub part b.
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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:
January 1, 2017 (start of business). . . . . . . . . . $0.80March 1, 2017. . . . . . . . . . . . 0.78Weighted average rate for 2017. . 0.77October 1, 2017. . . . . . . . . . . . . 0.76December 31, 2017. . . . . . . . .. . 0.75
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…
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…
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…
Chapter 10 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
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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