Foreign currency translation
Problem 7.2 Name_________________________
On January 2, 2008 the Lowell Corporation invested 470,000 FC in a foreign subsidiary. The foreign subsidiary maintains its accounting records in Foreign Currency (FC) and uses the FIFO inventory method.
The foreign exchange rates of FC currency to US dollars were:
|January 2, 2008 – February 28, 2008 |1.21 |(1 FC unit = 1.21 US dollars) |
|March 1, 2008 - June 30, 2008 |1.20 | |
|July 1, 2008 - October 31, 2008 |1.19 | |
|November 1, 2008 – January 1, 2009 |1.18 | |
|2008 average |1.195 | |
|Fourth quarter 2008 average |1.183 | |
|January 2, 2009 - June 30, 2009 |1.17 | |
|July 1, 2009 – January 1, 2010 |1.16 | |
|2009 average |1.165 | |
|Fourth quarter 2009 average |1.16 | |
1. If the foreign subsidiary's functional currency is Foreign Currency, convert its December 31, 2008 account balances to US dollars.
| | |Conversion | |
|Account |FC |Rate |US $ |
|Cash |110,000 | | |
|Accounts Receivable |210,000 | | |
|Merchandise Inventory |410,000 | | |
|Equipment, 1/25/08 |850,000 | | |
|Accumulated Depreciation, Equipment |(85,000) | | |
|Accounts Payable |(310,000) | | |
|Notes Payable, 5 years |(610,000) | | |
|Common Stock |(40,000) | | |
|Additional Paid-in Capital, Common Stock |(430,000) | | |
|Retained Earnings, 1/1/08 |0 | | |
|Dividends, 9/15/08 |35,000 | | |
|Sales |(1,510,000) | | |
|Cost of Goods Sold |940,000 | | |
|Operating Expenses (Cash) |210,000 | | |
|Depreciation Expense, Equipment |85,000 | | |
|Interest Expense |55,000 | | |
|Income Taxes Expense |80,000 | | |
|Cumulative Translation Adjustment |0 | | |
|Remeasurement (Gain) or Loss |0 | | |
2. Calculate the 2008 translation adjustment or remeasurement gain or loss.
| | |Conversion | |
|Item |FC |Rate |US $ |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
3. If the foreign subsidiary's functional currency is Foreign Currency, convert its December 31, 2009 account balances to US dollars.
| | |Conversion | |
|Account |FC |Rate |US $ |
|Cash |170,000 | | |
|Accounts Receivable |255,000 | | |
|Merchandise Inventory |560,000 | | |
|Equipment, 1/25/08 |850,000 | | |
|Accumulated Depreciation, Equipment |(170,000) | | |
|Accounts Payable |(350,000) | | |
|Notes Payable, 5 years |(610,000) | | |
|Common Stock |(40,000) | | |
|Additional Paid-in Capital, Common Stock |(430,000) | | |
|Retained Earnings, 1/1/09 |(105,000) | | |
|Dividends, 9/15/09 |40,000 | | |
|Sales |(1,740,000) | | |
|Cost of Goods Sold |1,100,000 | | |
|Operating Expenses (Cash) |240,000 | | |
|Depreciation Expense, Equipment |85,000 | | |
|Interest Expense |55,000 | | |
|Income Taxes Expense |90,000 | | |
|Cumulative Translation Adjustment |0 | | |
|Remeasurement (Gain) or Loss |0 | | |
4. Calculate the 2009 translation adjustment or remeasurement gain or loss:
| | |Conversion | |
|Item |FC |Rate |US $ |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
5. If the foreign subsidiary's functional currency is US dollars, convert its December 31, 2008 account balances to US dollars.
| | |Conversion | |
|Account |FC |Rate |US $ |
|Cash |110,000 | | |
|Accounts Receivable |210,000 | | |
|Merchandise Inventory |410,000 | | |
|Equipment/ 1/25/08 |850,000 | | |
|Accumulated Depreciation, Equipment |(85,000) | | |
|Accounts Payable |(310,000) | | |
|Notes Payable, 5 years |(610,000) | | |
|Common Stock |(40,000) | | |
|Additional Paid-in Capital, Common Stock |(430,000) | | |
|Retained Earnings, 1/1/08 |0 | | |
|Dividends, 9/15/08 |35,000 | | |
|Sales |(1,510,000) | | |
|Cost of Goods Sold |940,000 | | |
|Operating Expenses (Cash) |210,000 | | |
|Depreciation Expense, Equipment |85,000 | | |
|Interest Expense |55,000 | | |
|Income Taxes Expense |80,000 | | |
|Cumulative Translation Adjustment |0 | | |
|Remeasurement (Gain) or Loss |0 | | |
6. Calculate the 2008 translation adjustment or remeasurement gain or loss:
| | |Conversion | |
|Item |FC |Rate |US $ |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
7. If the foreign subsidiary's functional currency is US dollars, convert its December 31, 2009 account balances to US dollars.
| | |Conversion | |
|Account |FC |Rate |US $ |
|Cash |170,000 | | |
|Accounts Receivable |255,000 | | |
|Merchandise Inventory |560,000 | | |
|Equipment, 1/25/08 |850,000 | | |
|Accumulated Depreciation, Equipment |(170,000) | | |
|Accounts Payable |(350,000) | | |
|Notes Payable, 5 years |(610,000) | | |
|Common Stock |(40,000) | | |
|Additional Paid-in Capital, Common Stock |(430,000) | | |
|Retained Earnings, 1/1/09 |(105,000) | | |
|Dividends, 9/15/09 |40,000 | | |
|Sales |(1,740,000) | | |
|Cost of Goods Sold |1,100,000 | | |
|Operating Expenses (Cash) |240,000 | | |
|Depreciation Expense, Equipment |85,000 | | |
|Interest Expense |55,000 | | |
|Income Taxes Expense |90,000 | | |
|Cumulative Translation Adjustment |0 | | |
|Remeasurement (Gain) or Loss |0 | | |
8. Calculate the 2009 translation adjustment or remeasurement gain or loss:
| | |Conversion | |
|Item |FC |Rate |US $ |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related searches
- foreign currency exchange rate irs
- us treasury foreign currency exchange
- foreign currency exchange rates 2019
- irs foreign currency converter
- foreign currency exchange rate tables
- us treasury foreign currency rates
- foreign currency conversion rates federal
- foreign currency stock
- foreign currency abbreviation list
- foreign currency list of names
- converting foreign currency to us dollars
- foreign currency rate calculator