Question
Fenwicke Company organized and began operating a subsidiary in a foreign country on January 1, 2015, by investing LCU 78,000. This subsidiary immediately borrowed LCU
Fenwicke Company organized and began operating a subsidiary in a foreign country on January 1, 2015, by investing LCU 78,000. This subsidiary immediately borrowed LCU 195,000 on a five-year note with 5 percent interest payable annually beginning on January 1, 2016. The subsidiary then purchased for LCU 273,000 a building that had a 10-year anticipated life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, the subsidiary rents the building for three years to a group of local doctors for LCU 7,000 per month. By year-end, payments totaling LCU 70,000 had been received. On October 1, LCU 4,300 was paid for a repair made on that date. The subsidiary transferred a cash dividend of LCU 5,800 back to Fenwicke on December 31, 2015. The functional currency for the subsidiary is the LCU. Currency exchange rates for 1 LCU follow: |
January 1, 2015 | $ | 2.40 | = | 1 LCU |
October 1, 2015 | 2.25 | = | 1 | |
Average for 2015 | 2.20 | = | 1 | |
December 31, 2015 | 2.00 | = | 1 | |
Prepare a statement of cash flows in LCU for Fenwickes foreign subsidiary and then translate these amounts into U.S. dollars. (Amounts to be deducted and cash outflows should be indicated with minus sign.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started