Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
On December 31, Year 1. Precision Manufacturing Inc. (PMI) of Edmonton purchased 100% of the outstanding ordinary shares of Sandora Corp. of Flint, Michigan. Sandora's
On December 31, Year 1. Precision Manufacturing Inc. (PMI) of Edmonton purchased 100% of the outstanding ordinary shares of Sandora Corp. of Flint, Michigan. Sandora's comparative statement of financial position and Year 2 income statement are as follows: STATEMENT OF FINANCIAL POSITION At December 31 Year 2 Plant and equipment (net) US$ 6,230,000 Inventory 5,830, ege Accounts receivable 6,230,000 Cash 910, e US$19,700,00 Ordinary shares USS 5,138, e38 Retained earnings 7,618,888 Bonds payable-due Dec. 31, Year 6 4,930, eee Current liabilities 2,838,0 US$ 19,700,000 Year 2 US$ 7,430,809 6,43e, eco 4,830,000 1 ee.ee USS 19220.00 USS 5,130,980 7 139, eee 4,930.000 2,530, de US$ 19, 220,000 INCOME STATEMENT For the year ended December 31, Year 2 Sales US$43.000.000 cost of purchases 33, See Change in inventory boude Depreciation expense 78 0 Other expenses 5,498, de 40,300 prafat USS 2.0 Additional Information Lared Cost of purchases Change in inventory Depreciation expense Other expenses 33,540,000 600,000 700,eee 5,490, eee 40 330.000 US$ 2,670, eee Profit Additional Information Exchange rates Dec. 31 Year 1 Sep. 39, Year 2 Dec 31, Year 2 Average for Year 2 US$1. C$1.18 US$1 C$1.07 US$1 C$1.95 US$1 C$1.08 Sandora declared and paid dividends on September 30, Year 2 - The inventories on hand on December 31. Year 2. were purchased when the exchange rate was US$1 = ($106. Lared Cost of purchases Change in inventory Depreciation expense Other expenses 33,540,000 600,000 700,eee 5,490, eee 40 330.000 US$ 2,670, eee Profit Additional Information Exchange rates Dec. 31 Year 1 Sep. 39, Year 2 Dec 31, Year 2 Average for Year 2 US$1. C$1.18 US$1 C$1.07 US$1 C$1.95 US$1 C$1.08 Sandora declared and paid dividends on September 30, Year 2 - The inventories on hand on December 31. Year 2. were purchased when the exchange rate was US$1 = ($106. (b) Assume that Sandora's functional currency is the US dollar (1) Calculate the Year 2 exchange gain (loss) that would result from the translation of Sandora's financial statements and would be reported in other comprehensive income. (Input all amounts as positive value. Omit currency symbol in your response) (Click to select) C$ (1) Translate the Year 2 financial statements into Canadian dollars. (Round the values in the "Rate" column to 2 decimal places, Los amounts should be Indicated with a minus sign. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement Year 2 Rate Sales cost of purchases Change in inventory Depreciation expense Other expenses Total Profis other comprehensive Click to selec Click to selec v Click to select uss 43,889 Bee 33,548, Bee bea, Bea 280,00 5,498, 49,330, 2.67 realized exchange dannings Statements Year USS Rate 05 re Retained Earnings Statement - Year 2 US$ Rate Bal. Jan 1 7,130,000 Profit 2,670, eee x 9,808, eee Dividends 2,198,888 Bal. Dec 31 7,610,000 Rate Statement of Financial Position - December 31, Year 2 US$ Plant and equipment (net) 6,730, eee Inventory 5,830, eee Accounts receivable 6,230.000 Cash 912, 209 19,700,000 Ordinary shares 5.132.898 Retained earnings 2,ole,880 Accumulated foreign exchange adjustments Bonds payable 4.930,00 Current liabilities 2,81, 19.00, (c) Which functional currency wou d Sancora prefer to use if it wants to show the following (1) The strongest solvency position for the company Ordinary shares Retained earnings Accumulated foreign exchange adjustments Bonds payable Current liabilities 6,258, Beex 91e, eee 19,700, eee 5,138,eee 7,610, eee 4,930, eee 2,030,000 19,700, Bee (c) Which functional currency would Sandora prefer to use if it wants to show the following? (1) The strongest solvency position for the company. O Functional currency is Canadian dollar. O Functional currency is U.S. dollar and accumulated foreign exchange adjustments (AFEA) are included in equity O Functional currency is U.S. doilar and accumulated foreign exchange adjustments (AFEA) are excluded from equity (11) The best return on shareholders' equity Functional currency is Canadian dollar. Functional currency is U.S. dollar and other comprehensive income (OC) is included in income. Functional currency is US dollar and other comprehensive income (OC) is excluded income. On December 31, Year 1. Precision Manufacturing Inc. (PMI) of Edmonton purchased 100% of the outstanding ordinary shares of Sandora Corp. of Flint, Michigan. Sandora's comparative statement of financial position and Year 2 income statement are as follows: STATEMENT OF FINANCIAL POSITION At December 31 Year 2 Plant and equipment (net) US$ 6,230,000 Inventory 5,830, ege Accounts receivable 6,230,000 Cash 910, e US$19,700,00 Ordinary shares USS 5,138, e38 Retained earnings 7,618,888 Bonds payable-due Dec. 31, Year 6 4,930, eee Current liabilities 2,838,0 US$ 19,700,000 Year 2 US$ 7,430,809 6,43e, eco 4,830,000 1 ee.ee USS 19220.00 USS 5,130,980 7 139, eee 4,930.000 2,530, de US$ 19, 220,000 INCOME STATEMENT For the year ended December 31, Year 2 Sales US$43.000.000 cost of purchases 33, See Change in inventory boude Depreciation expense 78 0 Other expenses 5,498, de 40,300 prafat USS 2.0 Additional Information Lared Cost of purchases Change in inventory Depreciation expense Other expenses 33,540,000 600,000 700,eee 5,490, eee 40 330.000 US$ 2,670, eee Profit Additional Information Exchange rates Dec. 31 Year 1 Sep. 39, Year 2 Dec 31, Year 2 Average for Year 2 US$1. C$1.18 US$1 C$1.07 US$1 C$1.95 US$1 C$1.08 Sandora declared and paid dividends on September 30, Year 2 - The inventories on hand on December 31. Year 2. were purchased when the exchange rate was US$1 = ($106. Lared Cost of purchases Change in inventory Depreciation expense Other expenses 33,540,000 600,000 700,eee 5,490, eee 40 330.000 US$ 2,670, eee Profit Additional Information Exchange rates Dec. 31 Year 1 Sep. 39, Year 2 Dec 31, Year 2 Average for Year 2 US$1. C$1.18 US$1 C$1.07 US$1 C$1.95 US$1 C$1.08 Sandora declared and paid dividends on September 30, Year 2 - The inventories on hand on December 31. Year 2. were purchased when the exchange rate was US$1 = ($106. (b) Assume that Sandora's functional currency is the US dollar (1) Calculate the Year 2 exchange gain (loss) that would result from the translation of Sandora's financial statements and would be reported in other comprehensive income. (Input all amounts as positive value. Omit currency symbol in your response) (Click to select) C$ (1) Translate the Year 2 financial statements into Canadian dollars. (Round the values in the "Rate" column to 2 decimal places, Los amounts should be Indicated with a minus sign. Input all other amounts as positive values. Omit currency symbol in your response.) Income Statement Year 2 Rate Sales cost of purchases Change in inventory Depreciation expense Other expenses Total Profis other comprehensive Click to selec Click to selec v Click to select uss 43,889 Bee 33,548, Bee bea, Bea 280,00 5,498, 49,330, 2.67 realized exchange dannings Statements Year USS Rate 05 re Retained Earnings Statement - Year 2 US$ Rate Bal. Jan 1 7,130,000 Profit 2,670, eee x 9,808, eee Dividends 2,198,888 Bal. Dec 31 7,610,000 Rate Statement of Financial Position - December 31, Year 2 US$ Plant and equipment (net) 6,730, eee Inventory 5,830, eee Accounts receivable 6,230.000 Cash 912, 209 19,700,000 Ordinary shares 5.132.898 Retained earnings 2,ole,880 Accumulated foreign exchange adjustments Bonds payable 4.930,00 Current liabilities 2,81, 19.00, (c) Which functional currency wou d Sancora prefer to use if it wants to show the following (1) The strongest solvency position for the company Ordinary shares Retained earnings Accumulated foreign exchange adjustments Bonds payable Current liabilities 6,258, Beex 91e, eee 19,700, eee 5,138,eee 7,610, eee 4,930, eee 2,030,000 19,700, Bee (c) Which functional currency would Sandora prefer to use if it wants to show the following? (1) The strongest solvency position for the company. O Functional currency is Canadian dollar. O Functional currency is U.S. dollar and accumulated foreign exchange adjustments (AFEA) are included in equity O Functional currency is U.S. doilar and accumulated foreign exchange adjustments (AFEA) are excluded from equity (11) The best return on shareholders' equity Functional currency is Canadian dollar. Functional currency is U.S. dollar and other comprehensive income (OC) is included in income. Functional currency is US dollar and other comprehensive income (OC) is excluded income
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668e16cb89331_978668e16caefd2d.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668e16cc3ca04_979668e16cbca427.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668e16ccc8f0d_980668e16cc67f66.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668e16cd82e9c_981668e16cd084af.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668e16ce8bfe2_981668e16cdae3e7.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668e16cf68d2a_982668e16ced9688.jpg)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started