Chapter 11, Problem 11.24.1P

(a)

To determine

Introduction:Translation is the method used to convert financial results of the business of subsidiary company into the functional currency of parent company.Gain or loss arise due to sale or purchase of goods and services in a foreign currency is known as foreign currency transaction gain or loss.

The journal entries to record import and export of M company during 20X5 and 20X6.

(b)

To determine

Introduction:Translation is the method used to convert financial results of the business of subsidiary company into the functional currency of parent company.Gain or loss arise due to sale or purchase of goods and services in a foreign currency is known as foreign currency transaction gain or loss.

Net gain on foreign currency transaction to be shown in income statement of M company as on December 31, 20X5.