a
Introduction: The reportable segment is the course of action used to decide which of the operating segments are separately reportable, a separately reportable segment requires separate supplemental disclosures, based on management’s arrangement of these operating segments for the purpose of internal evaluation of the entity’s financial position and operating performance.
The foreign operations must be reported separately or not
b
Introduction: The reportable segment is the course of action used to decide which of the operating segments are separately reportable, a separately reportable segment requires separate supplemental disclosures, based on management’s arrangement of these operating segments for the purpose of internal evaluation of the entity’s financial position and operating performance.
The foreign operations must be reported separately or not using materiality threshold
c
Introduction: The reportable segment is the course of action used to decide which of the operating segments are separately reportable, a separately reportable segment requires separate supplemental disclosures, based on management’s arrangement of these operating segments for the purpose of internal evaluation of the entity’s financial position and operating performance.
The information about the company’s domestic and foreign operations as required by ASC280
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EBK ADVANCED FINANCIAL ACCOUNTING
- ABC Inc. is a U.S. firm with annual export sales to Canada of about C$500 million. Its main competitor is XYZ Inc., also based in the United States, with a subsidiary in Canada that generates about C$500 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Based on the information provided, which company is subject to a higher degree of translation exposure? Explain.arrow_forwardThe following balance sheet accounts of a foreign subsidiary at December 31, 2011, have been translated into U.S. dollars as follows: Translated at Current Rates Historical Rates Accounts receivable, current $ 600,000 $ 660,000 Accounts receivable, long-term 300,000 324,000 Inventories carried at market 180,000 198,000 Goodwill 190,000 220,000 $1,270,000 $1.402,000 What total should be included in the translated balance sheet at December 31, 2011, for the above items? Assume the U.S. dotlar is the functional currency $1,300,000 $1.288.000 10:56 EN lenovoarrow_forward4. Nagy Corporation’s International Division consists of two of Nagy’s subsidiaries. One of the subsidiaries operates in the United Kingdom and the other on the European continent. The U.K. subsidiary had identical sales revenue amounts, as measured in British pounds, in 20X1 and 20X2 and reported a 25% gross profit margin in both years. Similarly, the European subsidiary’s sales revenue was the same in 20X1 and 20X2 when measured in euros. It reported a 33.33% gross profit margin in both years. Both subsidiaries account for their inventories under FIFO. Assume the British pound was rising steadily in value versus the U.S. dollar throughout 20X1 and 20X2. Assume the euro was declining steadily in value versus the U.S. dollar throughout 20X1 and 20X2. Required: 1. If Nagy uses the current rate method to translate the British subsidiary’s financial statements into U.S. dollars, how is the British subsidiary’s 20X2 gross margin percentage, based on its U.S. dollar financial…arrow_forward
- On January 1, Narnevik Corporation formed a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory on account at a cost of 250,000 local currency units (LCU). One-fifth of this inventory remained unsold on December 31, while 30 percent of the account payable had not yet been paid. The U.S. $ per LCU exchange rates were as follows:At what amounts should the December 31 balances in inventory and accounts payable be translated into U.S. dollars using the current rate method?arrow_forwardSantas Corporation is a diversified firm with operations in the United States, Canada, Chile, Spain, and France, each of which qualifies as a geographic segment. Data with respect to those segments follows: Segments: US Canada Chile Spain France Corporate-level Total Revenues (in thousands) Unaffiliated Intersegment Customers $ 1,600 900 1,200 560 600 $4,860 1.400 $6.260 Sales $0 300 120 200 $620 $620 Total $ 1,600 1,200 1,320 560 800 Profit (Loss) $400 300 480 (60) (220) $5,480 $900 1,400 200 $6.880 $ 1.100 Assets $ 600 400 700 360 180 $2,240 2,000 $4,240 Required: Determine which of the Santas segments would be reportable segments using the three criteria as stipulated under U.S. GAAP. Show your calculations. Note: Students must show all calculations under the three criteria to receive maximum points available. Space is provided below.arrow_forwardTaft Corporation operates primarily in the United States. However, a few years ago it opened a plant in Spain to produce merchandise to sell there. This foreign operation has been so successful that during the past 24 months the company started a manufacturing plant in Italy and another in Greece. Financial information for each of these facilities follows:The company’s domestic (U.S.) operations reported the following information for the current year:Taft has adopted the following criteria for determining the materiality of an individual foreign country: (1) Sales to unaffiliated customers within a country are 10 percent or more of consolidated sales or (2) long-lived assets within a country are 10 percent or more of consolidated long-lived assets.Apply Taft’s materiality tests to identify the countries to report separately with respect to (a) revenues and (b) long-lived assets.arrow_forward
- Calculate the U.S. division’s operating income for 2017.arrow_forwardCertain balance sheet accounts of a foreign subsidiary of Paul Inc. at December 31, year 1, have been translated in US dollars as follows: Translated at Current Rates Historical Rates Note recievable, long term P 240,000 P 200,000 Prepaid rent 85,000 80,000 Patent 150,000 170,000 P 475,000 P 450,000 The subsidiary's functional currency is…arrow_forwardABC Trading Company of Singapore purchases spices in bulk from around the world, packages them into consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites States. For a recent month, the following payments matrix of inter-affiliate cash flows, stated in Singapore dollars, was forecasted. ABC Trading Company Payments Matrix (S$000) Receipts by: Singapore Hong Kong U.S. S$170,000 S$152,000 S$405,000 Disbursements by: S$322,000 Singapore 16 22 Hong Kong 80 50 Calculate, in Singapore dollars, the amount that the inter-affiliate foreign exchange transaction will be reduced by with multilateral netting. U.S. 110 44arrow_forward
- 1. ForCo, a corporation that is incorporated in a foreign country that does not have a treaty with the United States, plans to conduct manufacturing, marketing, and sales operations in the United States. These U.S. operations produce $5 million of earnings & profits in Year 1. Assume further that the U.S. operations will have a net worth of $17 million at the beginning of Year 1 and $20 million at the end of Year 1. During Year 2, the U.S. branch does not produce any earnings & profits and its net worth is $20 million at the beginning of the year and $10 million at the end of the year. For branch profits tax purposes in Year 1, the dividend equivalent amount (“DEA”) for the U.S. branch is as follows: a. $1.5 million. b. $2.0 million c. $10 million. $20 million. d. $25 million. 2. For branch profits tax purposes in Year 2, the DEA for the U.S. branch is as follows: a. $2 million. b. $3 million. c. $10 million. d. $20 million. e. $25 million.…arrow_forwardBillabong Fashion is based in Melbourne, Australia. Billabong Fashion has a subsidiary in Shanghai that generates RMB85 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Belle Fashion is the close competitor of Billabong Fashion. Belle Fashion is a local Australian company located in Japan with annual export sale to Malaysia of about MYR 45 million. Based on the information provided, which firm is subject to a higher degree of translation exposure? Justify your answer with thorough explanation on both companies.arrow_forwardTransfer Pricing; International Taxation Crain Company has a manufacturing subsidiary inSingapore that produces high-end exercise equipment for U.S. consumers. The manufacturing subsidiary has total manufacturing costs of $1,500,000, plus general and administrative expenses of$350,000. The manufacturing unit sells the equipment for $2,500,000 to the U.S. marketing subsidiary, which sells it to the final consumer for an aggregate of $3,500,000. The sales subsidiary hastotal marketing, general, and administrative costs of $200,000. Assume that Singapore has a corporate tax rate of 33% and that the U.S. tax rate is 46%. Assume that no tax treaties or other special taxtreatments apply.Required What is the effect on Crain Company’s total corporate-level taxes if the manufacturing subsidiary raises its price to the sales subsidiary by 20%?arrow_forward