ABC Inc. is a Kuwait based Company established a wholly owned overseas subsidiary XYZ Ltd on...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ABC Inc. is a Kuwait based Company established a wholly owned overseas subsidiary XYZ Ltd on 1 January 2010 in UK (share capital was issued on this date). The summary financial statements of XYZ at 31 December 2023 are as follows these statements are presented in British Pound. Assets Cash A/R - Net Inventory Investment at FV Plant property and equipment- Accumulated depreciation) 31 December 2023 BP 1,500,000 2,000,000 750,000 400,000 3,400,000 cost (1,200,000) Total Assets 6,850,000 Liabilities Accounts payable 400,000 Bonds Payable 1,500,000 Unearned revenue 200,000 Equity Share capital 1,000,000 Share premium 1,000,000 Retained Earnings 2,750,000 Total liabilities and equity 6,850,000 Income statement for S for year ending 31 December 2023 in BP Sales revenues BP BP 8,000,000 Beginning inventory 600,000 Purchases 5,700,000 Ending inventory -cost (750,000) Cost of goods sold (5,550,000) Gross profit 2,450,000 Depreciation expense (400,000) Administrative expense (220,000) Selling expense (380,000) Tax expense (180,000) Net income 1,270,000 beginning RE 1,800,000 Net income 1,270,000 Dividends (320,000) 2,750,000 Ending retained earnings Additional information: 1- Assume sales, purchases, administrative and selling expenses, and tax expense occur evenly during the year. 2- PPE was purchased on 1 January 2022 except for a building that was purchased on 1 Jan 2020 with a value of 1,200,000. 3- 25% of the depreciation expense related to building that was purchased on 1" Jan 2020. 4- Beginning Inventory was purchased evenly in the fourth quarter of 2022 5- Ending inventory was purchased evenly in the fourth quarter of 2023 6- Dividends were declared and paid at 31 December 2023 7- Unearned revenues were received on 20 December 2023 8- Ending merchandise inventory is stated at cost using LCNRV. NRV is 650,000 9- The translated Ending retained earnings carried over from the year 2022 is equivalent to 730,000 KD. 10- The movement in the exchange rate are as follows 1 January 2010 1 January 2020 1 KD = 3 1 KD- 2.4 Weighted Average for fourth quarter in 2022 1 KD = 2.75 Weighted Average for the 2023 year 1 KD = 2.6 Weighted Average for fourth quarter in 2023 1 KD = 2.5 20 December 2023 1 KD = 2.65 31 December 2023 1 KD = 2.9 Solve the questions based on the following scenario: a. Assume that the functional currency of XYZ Ltd is the Kuwaiti Dinar (KD). b. Assume that the functional currency of XYZ Ltd is the BP. ABC Inc. is a Kuwait based Company established a wholly owned overseas subsidiary XYZ Ltd on 1 January 2010 in UK (share capital was issued on this date). The summary financial statements of XYZ at 31 December 2023 are as follows these statements are presented in British Pound. Assets Cash A/R - Net Inventory Investment at FV Plant property and equipment- Accumulated depreciation) 31 December 2023 BP 1,500,000 2,000,000 750,000 400,000 3,400,000 cost (1,200,000) Total Assets 6,850,000 Liabilities Accounts payable 400,000 Bonds Payable 1,500,000 Unearned revenue 200,000 Equity Share capital 1,000,000 Share premium 1,000,000 Retained Earnings 2,750,000 Total liabilities and equity 6,850,000 Income statement for S for year ending 31 December 2023 in BP Sales revenues BP BP 8,000,000 Beginning inventory 600,000 Purchases 5,700,000 Ending inventory -cost (750,000) Cost of goods sold (5,550,000) Gross profit 2,450,000 Depreciation expense (400,000) Administrative expense (220,000) Selling expense (380,000) Tax expense (180,000) Net income 1,270,000 beginning RE 1,800,000 Net income 1,270,000 Dividends (320,000) 2,750,000 Ending retained earnings Additional information: 1- Assume sales, purchases, administrative and selling expenses, and tax expense occur evenly during the year. 2- PPE was purchased on 1 January 2022 except for a building that was purchased on 1 Jan 2020 with a value of 1,200,000. 3- 25% of the depreciation expense related to building that was purchased on 1" Jan 2020. 4- Beginning Inventory was purchased evenly in the fourth quarter of 2022 5- Ending inventory was purchased evenly in the fourth quarter of 2023 6- Dividends were declared and paid at 31 December 2023 7- Unearned revenues were received on 20 December 2023 8- Ending merchandise inventory is stated at cost using LCNRV. NRV is 650,000 9- The translated Ending retained earnings carried over from the year 2022 is equivalent to 730,000 KD. 10- The movement in the exchange rate are as follows 1 January 2010 1 January 2020 1 KD = 3 1 KD- 2.4 Weighted Average for fourth quarter in 2022 1 KD = 2.75 Weighted Average for the 2023 year 1 KD = 2.6 Weighted Average for fourth quarter in 2023 1 KD = 2.5 20 December 2023 1 KD = 2.65 31 December 2023 1 KD = 2.9 Solve the questions based on the following scenario: a. Assume that the functional currency of XYZ Ltd is the Kuwaiti Dinar (KD). b. Assume that the functional currency of XYZ Ltd is the BP.
Expert Answer:
Related Book For
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville
Posted Date:
Students also viewed these accounting questions
-
1. How much do you need to save weekly, if you want to buy an airplane in 6 years? The current cost of the plane is $95,000, the return on your investments is 7% and inflation is 3%? (10 points)
-
The unclassified balance sheet accounts for Sorkin Corporation, which is a public company using IFRS, for the year ended December 31, 2011, and its statement of comprehensive income and statement of...
-
On January 1, Year 1, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that date, Devine had ordinary shares of $3,500,000, and retained...
-
Air flows through the fine mesh gauze shown in the figure below with an average velocity of 1.50 m/s in the pipe. Determine the loss coefficient for the gauze. KL= i 8.1mm V = 1.5 m/s Water Gauze...
-
Prepare to write a review of a restaurant or a dining facility on campus. Use the process outlined in this chapter: Brainstorm ideas. What do you think is important to include in your review? Draw a...
-
(a) Draw D-allose, the C3 epimer of glucose. (b) Draw D-talose, the C2 epimer of D-galactose. (c) Draw D-idose, the C3 epimer of D-talose. Now compare your answers with Figure 23-3. (d) Draw the C4...
-
Assume you are a business consultant. The owner of a company sends you an e-mail expressing concern that the company is not taking advantage of its discounts offered by vendors. The company currently...
-
On January 1, 2016, the Wardens Restaurant decides to invest in Lake Turner bonds. The bonds mature on December 31, 2030, and pay interest on June 30 and December 31 at 5% annually. The market rate...
-
In an election, suppose that 45% of voters support creating a new fire district. If we poll 193 of these voters at random, the probability distribution for the proportion of the polled voters that...
-
Black Holdings Ltd. is a Canadian-controlled private corporation that sells farm supplies. It owns 70 percent of the outstanding shares of Blue Inc. On November 1, 2021, Blue Inc. declared and paid a...
-
A company purchased 36,000 kilograms of plastic pellets for \($8,640.\) These pellets are used in injection molding machines to produce plastic parts. The pellets have a standard cost of \($0.25\)...
-
Identify the type of accounting associated with each type of report: Managerial, Financial, Tax, or some combination as needed. a. Budget for internal use by management b. Tax return for state income...
-
Which of the following situations presents ethical challenges to accountants? a. Pressure by superiors to produce a "good" number b. Avoiding the disclosure of confidential information c. An emphasis...
-
How can budgets motivate and de-motivate managers?
-
How can the accuracy of a budget be improved?
-
2) Using the 70/20/10 model as a guide, create a development plan for Kai, with one specific development idea per category (i.e. one idea from the 70% section, one idea from the 20% section, and one...
-
If you want to solve a minimization problem by applying the geometric method to the dual problem, how many variables and problem constraints must be in the original problem?
-
Visit SunGards web site, http://www.sungard.com, and research its recovery services offered for the following classes: High Availability, System Recovery, and End-User Recover. Write a report of your...
-
Micro Systems, a developer of database software packages, is a publicly held company and listed with the SEC. The company has no internal audit function. In complying with SOX, Micro Systems has...
-
Leigh Industries has an internal audit department consisting of a director and four staff auditors. The director of internal audit, Diane Bauer, reports to the corporate controller, who receives...
Study smarter with the SolutionInn App