Christina Company (a U.S.-based company) has a subsidiary in Canada that began operations at the start...

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Christina Company (a U.S.-based company) has a subsidiary in Canada that began operations at the start of 2020 with assets of 146,000 Canadian dollars (CAD) and liabilities of CAD 82,000. During this initial year of operation, the subsidiary reported a profit of CAD 40,000. It distributed two dividends, each for CAD 6,400 with one dividend declared on March 1 and the other on October 1. Applicable U.S. dollar ($) exchange rates for 1 Canadian dollar follow: January 1, 2020 (start of business) March 1, 2020 Weighted average rate for 2020 October 1, 2020 December 31, 2020 $0.83 0.81 0.80 0.79 0.78 a. Assume that the Canadian dollar is this subsidiary's functional currency. What translation adjustment would the company report for the year 2020? b. Assume that on October 1, 2020, Christina entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, the company agreed to sell CAD 190,000 in three months at a forward exchange rate of $0.79/CAD1. Prepare the journal entries required by this forward contract. c. Compute the net translation adjustment the company will report in accumulated other comprehensive income for the year 2020 under this second set of circumstances. Required A Required B Required C Assume that the Canadian dollar is this subsidiary's functional currency. What translation adjustment would the company report for the year 2020? translation adjustment < Required A Required B > Required A Required B Required C Assume that on October 1, 2020, Christina entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, the company agreed to sell CAD 190,000 in three months at a forward exchange rate of $0.79/CAD 1. Prepare the journal entries required by this forward contract. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less View transaction list Journal entry worksheet 1 2 3 4 Record the entry for the Board being entered into a forward exchange contract. Note: Enter debits before credits. Date 10/01 General Journal Debit Credit Record entry Clear entry View general journal > Journal entry worksheet < 1 2 3 4 Record the change in the value of the forward contract. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit Journal entry worksheet < 1 2 3 4 Record the purchase of foreign currency. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit Journal entry worksheet < 1 2 3 Record the delivery of the foreign currency and the closing of forward contract account. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit Required A Required B Required C Compute the net translation adjustment the company will report in accumulated other comprehensive income for the year 2020 under this second set of circumstances. net translation adjustment < Required B Required C > Christina Company (a U.S.-based company) has a subsidiary in Canada that began operations at the start of 2020 with assets of 146,000 Canadian dollars (CAD) and liabilities of CAD 82,000. During this initial year of operation, the subsidiary reported a profit of CAD 40,000. It distributed two dividends, each for CAD 6,400 with one dividend declared on March 1 and the other on October 1. Applicable U.S. dollar ($) exchange rates for 1 Canadian dollar follow: January 1, 2020 (start of business) March 1, 2020 Weighted average rate for 2020 October 1, 2020 December 31, 2020 $0.83 0.81 0.80 0.79 0.78 a. Assume that the Canadian dollar is this subsidiary's functional currency. What translation adjustment would the company report for the year 2020? b. Assume that on October 1, 2020, Christina entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, the company agreed to sell CAD 190,000 in three months at a forward exchange rate of $0.79/CAD1. Prepare the journal entries required by this forward contract. c. Compute the net translation adjustment the company will report in accumulated other comprehensive income for the year 2020 under this second set of circumstances. Required A Required B Required C Assume that the Canadian dollar is this subsidiary's functional currency. What translation adjustment would the company report for the year 2020? translation adjustment < Required A Required B > Required A Required B Required C Assume that on October 1, 2020, Christina entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, the company agreed to sell CAD 190,000 in three months at a forward exchange rate of $0.79/CAD 1. Prepare the journal entries required by this forward contract. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less View transaction list Journal entry worksheet 1 2 3 4 Record the entry for the Board being entered into a forward exchange contract. Note: Enter debits before credits. Date 10/01 General Journal Debit Credit Record entry Clear entry View general journal > Journal entry worksheet < 1 2 3 4 Record the change in the value of the forward contract. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit Journal entry worksheet < 1 2 3 4 Record the purchase of foreign currency. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit Journal entry worksheet < 1 2 3 Record the delivery of the foreign currency and the closing of forward contract account. Note: Enter debits before credits. Date 12/31 General Journal Debit Credit Required A Required B Required C Compute the net translation adjustment the company will report in accumulated other comprehensive income for the year 2020 under this second set of circumstances. net translation adjustment < Required B Required C >

Answer rating: 100% (QA)

A Translation adjustment reported if CAD is the functional currency Initial net assets on ... View the full answer