International Accounting Capstone Case Study ACCT 445/646 Spring 2021 - Cline CASE STUDY OBJECTIVE The purpose of this case study is to apply the accounting principles we discuss in class in one seamless, comprehensive case. To this end, you will: (A) Journalize transactions for a multinational corporation, (B) Convert financial statements from IFRS principles to U.S. GAAP principles; (C) Translate financial statements from foreign currency to USD; and (D) Consolidate subsidiary and parent financial statements into one set of financial statements. To achieve these objectives, please use the information in the Case Background section below and your knowledge of course concepts to complete the associated Excel template available in Canvas. Then, use this template to complete the questions in the assignment in Connect. You may use your notes and work with others as you complete this assignment; however, the work you submit for grading should be your own. CASE BACKGROUND About the companies: TanCorp is a Chinese subsidiary of TechSmart Inc., a U.S. technology manufacturer. TanCorp and TechSmart have a 12/31/Y1 year end. Foreign currency transaction: On November 10, Y1, TechSmart sells semiconductor devices to a Chinese customer (not TanCorp) at a price of 12,400,000 Yuan. This account was still unpaid by the customer on 12/31/Y1. The customer is expected to pay on January 10, Y2. To protect against foreign currency risk associated with this transaction, on November 10, Y1, TechSmart paid entered into a forward contract to sell 12,400,000 Yuan on January 10, Y2. TechSmart properly documented this transaction and designated the contract as a fair value hedge. Note: The financial statements provided in the Excel template DO NOT include the effects of the foreign currency/hedging transactions described above or the original journal entry to record the sale. You will need to update the TechSmart financials to include these transactions on the tab titled '2. Updated TS FS.' Exchange rates: Relevant exchange rates are provided in the Excel template. Accounting policies: TechSmart uses LIFO for its consolidated financial statements. TanCorp cannot use LIFO for reporting purposes; thus; their subsidiary-only financial statements utilize FIFO. Ending inventory measured under LIFO would be 280,800 Yuan lower than when measured using FIFO; COGS would be 280,800 higher.