Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help in this question. Please do it correctly and accurately and 100% 5 5 points On January 1, 20X1. Par Company purchased all

I need help in this question. Please do it correctly and accurately and 100%

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

5 5 points On January 1, 20X1. Par Company purchased all the outstanding stock of South Bay Company, located in Canada, for $120.000. On January 1, 20x1, the direct exchange rate for the Canadian dollar (C$) was C$1 = $0.80. South Bay's book value on January 1, 20X1. was $90.000. The fair value of South Bay's plant and equipment was C$10.000 more than book value and the plant and equipment are being depreciated over 10 years with no salvage value. The remainder of the differential is attributable to a trademark, which will be amortized over 10 years. During 20X1. South Bay earned C$20,000 in Income and declared and pald C$8.000 in dividends. The dividends were declared and paid in Canadian dollars when the exchange rate was $1 = $0.75. On December 31, 20X1. Par continues to hold the Canadian currency recelved from the dividend. On December 31, 20x1, the direct exchange rate is $1 = $0.70. The average exchange rate during 20x1 was C$1 = $0.75. Management has determined that the Canadian dollar is South Bay's appropriate functional currency. Required: a. Prepare a schedule showing the differential allocation and amortization for 20X1. The schedule should present both Canadian dollars and U.S. dollars. (Amounts to be deducted should be entered with a minus sign. Round "Exchange Rate" answers to 2 decimal places and rest of answers to nearest whole dollar.) eBook Print References Canadian Dollars Exchange Rate U.S. Dollars Investment cost Book value of investment on January 1, 20X1 Differential Exchange Rate Canadian Dollars Plant and equipment Trademark U.S. Dollars Plant and Trademark equipment C Income Statement Differential at date of acquisition: Amortization this period: (10 years) Remaining balance Balance Sheet: Remaining balance on 12/31/X1 translated at year-end exchange rates Difference to OCtranslation adjustment: C C 5 b. Par uses the fully adjusted equity method to account for its investment. Provide the entries that it would record in 20x1 for its Investment in South Bay for the following items: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answer to nearest whole dollar.) 5 points View transaction Mat eBook Journal entry worksheet References Record the equity in income of the subsidiary. Note: Enter debits before credits Event General Journal Debit Credit 2 Record entry Clear entry View general Journal b. Par uses the fully adjusted equity method to account for its Investment. Provide the entries that it would record in 20x1 for its Investment in South Bay for the following items: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answer to nearest whole dollar.) ints View transaction Mat eBook Journal entry worksheet C Print D E Record the dividend from the foreign subsidiary. References Note: Enter debits before credits General Journal Debit Credit Event 3 Record entry Clear entry View general Journal b. Par uses the fully adjusted equity method to account for its Investment. Provide the entries that it would record in 20x1 for its Investment in South Bay for the following items: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answer to nearest whole dollar.) View transaction llat Journal entry worksheet > Record the exchange loss on the foreign currency units held on December 31, 20X1. Note: Enter debits before credits Event General Journal Debit Credit 1 Record entry Clear entry View general Journal

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

Economics In Minutes 200 Key Concepts Explained In An Instant

Authors: Niall Kishtainy

1st Edition

1782066470, 9781782066477

More Books

Students also viewed these Accounting questions

Question

Appreciate the legal implications of employment documentation

Answered: 1 week ago