Question
Costco Canada Holdings is a Canadian subsidiary of Costco Wholesale Corporation, a U.S. company. Assume that the following data relate to Costco Canada's activities for
Costco Canada Holdings is a Canadian subsidiary of Costco Wholesale Corporation, a U.S. company. Assume that the following data relate to Costco Canada's activities for 2020 (in millions).
Net monetary assets (liabilities), January 1, 2020C$ 700Acquisition of plant assets for debt, February 15, 20201,000Purchase of inventory made evenly during 20203,500Collection of receivables outstanding at January 1, 20202,700Sales made evenly during 20206,000Cost of goods sold3,300Depreciation of assets acquired when the exchange rate was $0.85/C$400Current operating expenses (excluding depreciation and amortization),
incurred evenly during 20201,200Refinancing or "rollover" of commercial paper800
Exchange rates ($/C$) during 2020 are:
January 1, 2020$0.80Average for 2020$0.75February 15, 20200.78December 31, 20200.72
(a) Assuming Costco Canada's functional currency is the U.S. dollar, prepare schedule to compute the remeasurement gain or loss for 2020.
Instructions:
- Use negative signs with answers to indicate a negative exposed position balance.
- Use negative signs with answers to indicate an amount that reduces the exposed position balance.
- Using the drop-down menu, select the appropriate answer to indicate a remeasurement gain or remeasurement loss.
- Do not use a negative signwith your remeasurement gain or remeasurement loss answer.
(in millions)Amount (C$)$/C$Amount ($)Exposed position, 1/1/20C$Answer
Answer
$Answer
Acquisition of plant assets for debtAnswer
Answer
Answer
Purchase of inventoryAnswer
Answer
Answer
SalesAnswer
Answer
Answer
Operating expensesAnswer
Answer
Answer
Answer
Exposed position, 12/31/20C$Answer
Answer
Answer
Answer
Remeasurement gain
Remeasurement loss
$Answer
(b) Assuming Costco Canada's functional currency is the Canadian dollar, prepare a schedule to compute the translation gain or loss for 2020. Assume net assets on January 1, 2020, amounted to C$1,200 million.
Instructions:
- Use negative signs with answers to indicate a negative exposed position balance.
- Use negative signs with answers to indicate an amount that reduces the exposed position balance.
- Using the drop-down menu, select the appropriate answer to indicate a translation gain or translation loss.
- Do not use a negative signwith your translation gain or translation loss answer.
(in millions)Amount (C$)$/C$Amount ($)Exposed position, 1/1/20C$Answer
Answer
$Answer
Net income in 2020Answer
Answer
Answer
Answer
Exposed position, 12/31/20C$Answer
Answer
Answer
Answer
Translation gain
Translation loss
$Answer
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