Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Dove Corporation of Toronto acquired 100% of the outstanding common shares of Astral company of Libya on January 1 of Year 7. On this date,

Dove Corporation of Toronto acquired 100% of the outstanding common shares of Astral company of Libya on January 1 of Year 7. On this date, the fair values of Astral company's identifiable assets and liabilities were equal to their carrying amounts. Astral's financial statements for the year ended December 31, Year 9 are presented as follows: Cash and cash equivalents Accounts receivable Inventory Plant and equipment (net) Accounts payable Notes payable Common shares Retained earnings BALANCE SHEET At December 31, Year 9 LYD 862,900 751,900 899,900 1,601,900 LYD 4,116,600 LYD 806,900 201,900 1,001,900 2,105,900 LYD 4,116,600 INCOME STATEMENT For the year ended December 31, Year 9 Sales Inventory, Jan. 1 Purchases Inventory, Dec. 31 Depreciation expense Other expenses Profit Additional Information Exchange rates LYD 6,207,900 1,422,900 3,939,900 (899,900) 201,900 505,900 5,170,700 LYD 1,037,200 January 1, Year 7 LYD1 = $0.74 January 1, Year 8 LYD1 = $0.52 Average for Year 8 LYD1 = $0.54 Sep. 30, Year 9 LYD1= $0.62 Dec. 31, Year 9 LYD1 = $0.65 Average for Year 9 LYD1 = $0.58 Astral Company declared and paid dividends on September 30, Year 9. Tho inventories on hand on December 21 Voar a wore nurchacod when the ovchange rate was IVD1 - $0.63 Astral Company declared and paid dividends on September 30, Year 9. The inventories on hand on December 31, Year 9, were purchased when the exchange rate was LYD1 = $0.63. All inventory on hand at the beginning of Year 9 were purchased evenly in Year 8. The plant and equipment were purchased on January 1, Year 8 and are being amortized on a straight line basis over its estimated useful life of 10 years. All sales and purchases and other expenses occurred evenly throughout the year. On January 1, Year 9, the retained earnings of Astral Company was LYD 1,964,900 which amounted to $1,041,900 Canadian dollars. Required: (a) Assume that Astral's functional currency is the Canadian dollar, prepare translated financial statements for Year 9. (Hint: Prepare the balance sheet first and your retained earnings number will be a plug. Use the translated retained earnings to prepare the retained earnings statement and your profit figure will be a plug.) (Round the Rate answers to 2 decimal places. Exchange gain, if any, should be entered as positive value, and Exchange loss, if any, should be entered with a minus sign. Input all other amounts as positive values. Omit currency symbol in your response.) Balance Sheet - December 31, Year 9 Cash and cash equivalents Accounts receivable Inventory Plant and equipment (net) Accounts payable Notes payable Common shares Retained earnings LYD 862,900 x 751,900 x 899,900 X 1,601,900 x LYD 4,116,600 $ LYD 806,900 x $ 201,900 x 1,001,900 x 2,105,900 Plug LYD 4,116,600 $ Retained Earnings Statement - Year 9 Bal. Jan. 1 Net income Dividends Closing retained earnings LYD 1,964,900 1,037,200 3,002,100 given plug 896,200 x LYD 2,105,900 B/S above Year 9 Income Statement Sales Cost of goods sold Depreciation expense Other expenses (Click to select) (Click to select) LYD 6,207,900 x $ 4,462,900 Note 1 201,900 x 505,900 x 5,170,700 LYD 1,037,200 (b) Assume that Astral's functional currency is the Libyan dinar, prepare translated financial statements for Year 9 if the translated retained earnings at January 1, Year 9 under the presentation currency translation method is $1,231,900 Canadian dollars and there was no prior balance in Accumulated Other Comprehensive Income. (Hint: Prepare the income statement first and then the statement of retained earnings. Use the translated retained earnings to prepare the balance sheet and the exchange gain or loss in OCI will be a plug.) (Round the Rate answers to 2 decimal places. Exchange gain, if any, should be entered as positive value, and Exchange loss, if any, should be entered with a minus sign. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement - Year 9 Sales Cost of goods sold Depreciation expense Other expenses LYD 6,207,900 x 4,462,900 x 201,900 x 505,900 x (Click to select) 5,170,700 LYD 1,037,200 $ Retained Earnings Statement - Year 9 Bal. Jan. 1 Net income Dividends Closing retained earnings LYD 1,964,900 1,037,200 x 3,002,100 896,200 x LYD 2,105,900 given B/S above $ Balance Sheet - December 31, Year 9 Cash and cash equivalents Accounts receivable Inventory Plant and equipment (net) Accounts ushl LYD 862,900 x 751,900 x 899,900 x 1,601,900 x LYD 4,116,600 000 $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Simple Accounting

Authors: Gustav Muhsfeldt

1st Edition

B005MAAH4W

More Books

Students also viewed these Accounting questions

Question

The future value of $ 4 9 0 six years from now at 5 percent.

Answered: 1 week ago

Question

Q.1. Taxonomic classification of peafowl, Tiger and cow ?

Answered: 1 week ago

Question

Q .1. Different ways of testing the present adulterants ?

Answered: 1 week ago

Question

Q.1. Health issues caused by adulteration data ?

Answered: 1 week ago

Question

1. Identify outcomes (e.g., quality, accidents).

Answered: 1 week ago