On January 1, 20X7, CP Co. (a Canadian company) purchased 80% of SF Co. (a U.S....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 20X7, CP Co. (a Canadian company) purchased 80% of SF Co. (a U.S. company) at a cost of US$50,000. The book values of SF's net assets were equal to their fair market values on this date except for the building, which had a fair market value of US$65,000 and a remaining useful life of 10 years. This building was purchased by SF on January 2, 20X3, the date SF Co. was incorporated and all its common shares issued. Goodwill was not impaired in 20X7 The statement of financial position of SF in U.S. dollars on January 1, 20X7, is as follows: Cash Accounts receivable Inventory (purchased Dec. 17, 20X6) Building (net) Current liabilities Bonds payable Common shares Retained earnings SF Co. Statement of financial position As at January 1, 20X7 5,000 15,000 January 1, 20X7 March 1, 20X7 July 1, 20X7 December 31, 20X7 20X7 average 5,000 55,000 80.000 18,000 25,000 10,000 27,000 80.000 On July 1, 20X7, SF purchased machinery at a cost of US$30,000. The machinery has a 10-year useful life with zero residual value. Straight-line depreciation is appropriate. The following exchange rates were in effect during 20X7: January 2, 20X3 US$1 = $1.32 December 17, 20X6 US$1 = $1.37 US$1 = $1.40 US$1 = $1.41 US$1 = $1.42 US$1 = $1.39 US$1= $1.38 The financial statements of SF for December 31, 20X7, are reported below. SF Co. Statement of financial position As at December 31, 20X7 Cash Accounts receivable Inventory (purchased March 1, 20X7) Machinery (net) Building (net) Current liabilities Bonds payable Common shares Retained earnings, Dec 31 Sales Cost of goods sold Depreciation Other expenses SF (US$) 6,000 12,500 7,000 28,500 49,500 103.500 20,000 25,000 10,000 48,500 103.500 SF Co. Statement of comprehensive income For the year ended December 31, 20X7 76,500 20,000 7,000 26,000 23.500 Assume that expenses have been incurred evenly throughout the year. SF does not have any balances related to accumulated other comprehensive income, where applicable. When SF declares dividends for a particular year, it always does so on December 31. Required: a) Assuming that SF's functional currency is the Canadian dollar: i. Calculate the foreign exchange gain or loss on net monetary items for 20X7. (5.5 marks) ii. Translate the statement of comprehensive income for the year ended December 31, 20X7. (2.5 marks) iii. iv. Translate the statement of financial position for the year ended December 31. 20X7. (3.5 marks) Reconcile the change in translated retained earnings for the year ended December 31, 20X7. (1 mark) b) Assuming that SF's functional currency is the U.S. dollar: i. Calculate the foreign exchange gain or loss on net assets for 20X7. (4 marks) ii. Translate the statement of comprehensive income for the year ended December 31, 20X7. (2 marks) iii. Translate the statement of financial position for the year ended December 31, 20X7. (2 marks) On January 1, 20X7, CP Co. (a Canadian company) purchased 80% of SF Co. (a U.S. company) at a cost of US$50,000. The book values of SF's net assets were equal to their fair market values on this date except for the building, which had a fair market value of US$65,000 and a remaining useful life of 10 years. This building was purchased by SF on January 2, 20X3, the date SF Co. was incorporated and all its common shares issued. Goodwill was not impaired in 20X7 The statement of financial position of SF in U.S. dollars on January 1, 20X7, is as follows: Cash Accounts receivable Inventory (purchased Dec. 17, 20X6) Building (net) Current liabilities Bonds payable Common shares Retained earnings SF Co. Statement of financial position As at January 1, 20X7 5,000 15,000 January 1, 20X7 March 1, 20X7 July 1, 20X7 December 31, 20X7 20X7 average 5,000 55,000 80.000 18,000 25,000 10,000 27,000 80.000 On July 1, 20X7, SF purchased machinery at a cost of US$30,000. The machinery has a 10-year useful life with zero residual value. Straight-line depreciation is appropriate. The following exchange rates were in effect during 20X7: January 2, 20X3 US$1 = $1.32 December 17, 20X6 US$1 = $1.37 US$1 = $1.40 US$1 = $1.41 US$1 = $1.42 US$1 = $1.39 US$1= $1.38 The financial statements of SF for December 31, 20X7, are reported below. SF Co. Statement of financial position As at December 31, 20X7 Cash Accounts receivable Inventory (purchased March 1, 20X7) Machinery (net) Building (net) Current liabilities Bonds payable Common shares Retained earnings, Dec 31 Sales Cost of goods sold Depreciation Other expenses SF (US$) 6,000 12,500 7,000 28,500 49,500 103.500 20,000 25,000 10,000 48,500 103.500 SF Co. Statement of comprehensive income For the year ended December 31, 20X7 76,500 20,000 7,000 26,000 23.500 Assume that expenses have been incurred evenly throughout the year. SF does not have any balances related to accumulated other comprehensive income, where applicable. When SF declares dividends for a particular year, it always does so on December 31. Required: a) Assuming that SF's functional currency is the Canadian dollar: i. Calculate the foreign exchange gain or loss on net monetary items for 20X7. (5.5 marks) ii. Translate the statement of comprehensive income for the year ended December 31, 20X7. (2.5 marks) iii. iv. Translate the statement of financial position for the year ended December 31. 20X7. (3.5 marks) Reconcile the change in translated retained earnings for the year ended December 31, 20X7. (1 mark) b) Assuming that SF's functional currency is the U.S. dollar: i. Calculate the foreign exchange gain or loss on net assets for 20X7. (4 marks) ii. Translate the statement of comprehensive income for the year ended December 31, 20X7. (2 marks) iii. Translate the statement of financial position for the year ended December 31, 20X7. (2 marks)
Expert Answer:
Answer rating: 100% (QA)
ii Translate the statement of comprehensive income for the year ended December 31 20X7 SF Company St... View the full answer
Related Book For
Management Fundamentals Concepts, Applications and Skill Development
ISBN: 978-1506303277
7th edition
Authors: Robert N. Lussier
Posted Date:
Students also viewed these accounting questions
-
a. Why is it important to keep paid-in capital separate from earned capital? b. As an investor, is paid-in or earned capital more important? Why? c. As an investor, are basic or diluted earnings per...
-
Write a 700 to 1 050 word paper explaining how e-business has affected your selected organization's business processes. Analyze the advantages limitations and risks of using or not using the Internet...
-
Why is it important to keep records of meeting assignments?
-
Is the PS assessment a valid predictor of performance as a store manager? Would you recommend the PS be used in the future to select sales people for promotion to store manager?
-
The following data show the rankings of 11 states based on expenditure per student (ranked 1 highest to 11 lowest) and student-teacher ratio (ranked 1 lowest to 11 highest). a. What is the rank...
-
The following income statement was prepared for the Alpha Beta Partnership, a partnership comprising two individuals that carries on an active business: The partners drew a total of $67,000 in...
-
Bottling Company acquired a 75 percent interest in Regional Bottling Partnership on January |, 2008. Assume the following information related to this acquisition: The excess of fair value over book...
-
Jerry Karron, an auditor with Joshi CPAs, is performing a review of Duncan Companys Inventory account. Duncan did not have a good year, and top management is under pressure to boost reported income....
-
\l-V Z! E16-19 (Issuance, Exercise, and Termination of Stock Options) On January 1, 2017, Waldorf Corporation granted 40,000 options to key executives. Each option allows the executive to purchase...
-
Write a project management plan. we have a template and project description. we need to edit the template(table of contents) with our own ideas. CPSC 8820-01 Project Management Plan Your Unique...
-
The Handheld Devices Division of Plasteel Communications is evaluating a proposal to introduce a new line of cellular telephones. In evaluating the proposed project, the company has collected the...
-
The bank statement for the checking account of Management Systems Incorporated (MSI) showed a December 31, 2024, balance of $16,135.87. Information that might be useful in preparing a bank...
-
Ramos was in Australia on a Temporary Skill Shortage Class GK (subclass 482) visa, which was valid for four years. He was sponsored by his employer, Double Chin Pty Ltd, to work as a chef in their...
-
Assume the following: The standard labor rate per hour is $17.00. The standard labor-hours allowed per unit of finished goods is 3 hours. The actual quantity of labor hours worked during the period...
-
Discuss the Four International Strategies and provide an example of each: Global standardization. Localization strategy. Transnational strategy. International strategy.
-
Let's use this space to share and collaborate. As you start this module and go through the assignments, visit this area and address all or any of the questions listed below. Tie your input to one or...
-
Question One Jay Rexford, president of Frame-it Company, was just concluding a budget meeting with his senior staff. It was November of 20x2, and the group was discussing preparation of the firm's...
-
Draw and label the E and Z isomers for each of the following compounds: 1. CH3CH2CH==CHCH3 2. 3. 4. CH,CH2C CHCH2CH Cl CH3CH2CH2CH2 CH CH2CCCH2CI CHCH3 CH3 HOCH CH CCC CH O-CH C(CH
-
What is a new venture, and who starts it?
-
Why is a company situation analysis part of the strategic planning process?
-
What are the five leadership styles identified by the normative leadership model?
-
Jackson Sales Company has prepared the following budgets for the second quarter of 2005: Required: Prepare a cash payment schedule for the second quarter of 2005. Jackson Sales Company Selling and...
-
The following budgeted information is available for the Top Coat Clothing Company for January 2005. Selling and administrative expenses are paid in the month incurred and purchases are paid in the...
-
The following budgeted information is available for Jacks Feed Store in June 2005. Selling and administrative expenses are paid in the month incurred and purchases are paid in the month following the...
Study smarter with the SolutionInn App