Question
Advanced Financial Accounting: E125: Translation: LO 124 , 125 :- On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland
Advanced Financial Accounting:
E125: Translation:
LO 124 , 125 :-
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. SunTimes December 31, 20X1, trial balance in SFr is as follows:
Additional Information
1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creeks 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 years 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.
Required:-
a) Prepare a schedule translating the December 31, 20X1, trial balance fromSwiss francs to dollars.
b) Prepare a proof of the translation adjustment computed in Exercise E12-5.
c) Where is the translation adjustment reported on Popular Creeks consolidated financial statements and its foreign subsidiary?
Refer to the data in Exercise E12-5, but assume that the dollar is the functional currency for the foreign subsidiary.
Required
d) Prepare a schedule remeasuring the December 31, 20X1, trial balance fromSwiss francs to dollars.
\begin{tabular}{ll} \hline & SFr $ \\ \hline January 1 & 1=0.73 \\ March 1 & 1=0.74 \\ November 1 & 1=0.77 \\ December 31 & 1=0.80 \\ 20X1 average & 1=0.75 \\ \hline \end{tabular}
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