Refer to the data in Exercise E12–5, but now assume that the exchange rates were as follows:

The receivable from Popular Creek Corporation is denominated in Swiss francs. Popular Creek’s books show a $3,650 payable to SunTime. Assume the Swiss franc is the functional currency.

Required

a. Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars.

b. Compare the results of Exercise E12–5, in which the dollar is weakening against the Swiss franc during 20X1, with the results in this exercise (E12–9), in which the dollar is strengthening against the Swiss franc during 20X1.

Data from Exercises 5

On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. SunTime’s December 31, 20X1, trial balance in SFr is as follows:

Additional Information

1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek’s books show a $4,000 payable to SunTime.

2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.

3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year’s depreciation is taken in the year of acquisition. The equipment was acquired on March 1.

4. The dividends were declared and paid on November 1.

5. Exchange rates were as follows:

6. The Swiss franc is the functional currency.

Transcribed Image Text:

January 1 March 1 November 1 December 31 20X1 average SFr $ 1 = 0.80 1 = 0.77 1 = 0.74 1 = 0.73 1 = 0.75