ADVANCED FINANCIAL ACCOUNTING IA
ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
Question
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Chapter 12, Problem 12.14E

a

To determine

Introduction: Translation adjustment is the method used to convert the local currency into the parents' functional currency when the local currency is the foreign entity’s functional currency. The current rate is used to translate the financial statements that are the exchange rate on the balance sheet date. The average rate is used to translate revenue and expenses as it is assumed that occurs uniformly over the period. Any gain or loss on account of translation adjustment is recognized in the comprehensive income statement.

The entries for purchase and sale of land that would be made on the books of Mexican subsidiary.

b

To determine

Introduction: Translation adjustment is the method used to convert the local currency into the parents' functional currency when the local currency is the foreign entity’s functional currency. The current rate is used to translate the financial statements that are the exchange rate on the balance sheet date. The average rate is used to translate revenue and expenses as it is assumed that occurs uniformly over the period. Any gain or loss on account of translation adjustment is recognized in the comprehensive income statement.

The gain or loss on the transaction that would be reported on subsidiary’s re-measured income statement in U.S dollars assuming dollar is functional currency.

c

To determine

Introduction: Translation adjustment is the method used to convert the local currency into the parents' functional currency when the local currency is the foreign entity’s functional currency. The current rate is used to translate the financial statements that are the exchange rate on the balance sheet date. The average rate is used to translate revenue and expenses as it is assumed that occurs uniformly over the period. Any gain or loss on account of translation adjustment is recognized in the comprehensive income statement.

The amount of gain or loss on the translation that would be reported on the subsidiary translated income statement in U.S dollar assuming Mexican peso as functional currency.

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Chapter 12 Solutions

ADVANCED FINANCIAL ACCOUNTING IA