Question
gsfield establishes a subsidiary operation in a foreign country on January 1, 2017. The countrys currency is the kumquat (KQ). To start this business, Kingsfield
gsfield establishes a subsidiary operation in a foreign country on January 1, 2017. The countrys currency is the kumquat (KQ). To start this business, Kingsfield invests 10,000 kumquats. Of this amount, it spends 3,000 kumquats immediately to acquire equipment. Later, on April 1, 2017, it also purchases land. All subsidiary operational activities occur at an even rate throughout the year. The U.S. dollar ($) exchange rates for the kumquat for 2017 follow:
A corporation based in East Lansing, Michigan, Kingsfield uses the U.S. dollar as its reporting currency.
a, Assume that the subsidiarys functional currency is the kumquat. Prepare a trial balance for it in U.S. dollars so that 2017 consolidated financial statements can be prepared.
b, Assume that the subsidiarys functional currency is the U.S. dollar. Prepare a trial balance for it in U.S. dollars so that 2017 consolidated financial statements can be prepared.
January 1 April 1 June 1 Weighted average December 31 $ 1.71 1.59 1.66 1.64 1.62 As of December 31, 2017, the subsidiary reports the following trial balance: Debits Credits Cash Accounts receivable Equipment Accumulated depreciation Land Accounts payable Notes payable (due 2025) Common stock Dividends declared (6/1/17) Sales Salary expense Depreciation expense Miscellaneous expenses KQ 8,000 9,000 3,000 KQ600 5,000 3,000 5,000 10,000 4,000 25,000 5,000 600 9,000 KQ 43,600 Totals KQ 43,600Step by Step Solution
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