Question
IBM Corporation, a U.S. Company, formed a subsidiary with a new company in Paris on January 1, 2019, by investing 400,000 Euro in exchange for
IBM Corporation, a U.S. Company, formed a subsidiary with a new company in Paris on January 1, 2019, by investing 400,000 Euro in exchange for all of the subsidiary’s common stock. On July 1, 2019, the subsidiary purchased land for 100,000 Euro and a building for 300,000 Euro. The building is being depreciated over a 40-year life by the straight-line method. The inventory is valued at historical cost.The Euro is the subsidiary’s functional currency and its reporting currency. Exchange rates for the Euro on various dates were:
January 1, 2019 | 1 Euro = 1.51 |
July 1, 2019 | 1 Euro = 1.56 |
December 31, 2019 | 1 Euro = 1.53 |
2019 average rate | 1 Euro = 1.52 |
The subsidiary’s adjusted trial balance is presented below for the year ended December 31, 2019.
Debits | Credit | |
Cash | 100,000 | |
Accounts receivable | 60,000 | |
Inventory | 80,000 | |
Land | 100,000 | |
Building | 300,000 | |
Accumulated depreciation | 3,750 | |
Accounts payable | 84,000 | |
Notes Payable | 16,750 | |
Common stock | 400,000 | |
Retained earnings | 0 | |
Sales revenue | 443,000 | |
Cost of goods sold | 213,750 | |
Depreciation expense | 3,750 | |
Other expenses | 90,000 | |
Total | 947,500 | 947,500 |
(Using the current rate method)
Instructions:
Translated trial balance (round to the nearest dollar).
Translated income statement.
Translated retained earnings statement.
Translated balance sheet statement.
Step by Step Solution
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1 Translated Trial Balance Particulars Dr Cr Conversion Rate Dr Cr Cash 100000 156 156000 Accounts R...Get Instant Access to Expert-Tailored Solutions
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