On January 1, 20X1, Kiner Company formed a foreign subsidiary that issued all of its currently outstanding common stock on that date. Selected accounts from the balance sheets, all of which are shown in local currency units, are as follows: December 31 20x2 20x1 LCU 35,000 77,000 LCU 30,000 72,000 ts Receivable (net of allowance for uncollectible accounts of 1,300 LCU on December 31, 20X2, and 1,100 LCU on December 31, 20X1) Inventories, at cost Property, Plant & Equipment (net of allowance for accumulated depreciation of 35,700 LCU on December 31, 20X2, and 16,000 LCU on December 31, 2001) Long-Term Debt Common Stock, authorized 12,000 shares, par value 10 LCU per share; issued and outstanding, 6,000 shares on December 31, 20X2, and December 31, 20X1 182,300 90,000 165,000 110,000 standing, 6,000 shares 60,000 60,000 Additional Information: 1. Exchange rates are as follows: January 1, 20X1-July 31, 20X1 August 1, 20X1-October 31, 20X1 November 1, 20X1-June 30, 20X2 July 1, 20X2-December 31, 20X2 Average monthly rate for 20x1 Average monthly rate for 20X2 LCU 2.0 1.8 1.7 1.5 1.9 1.6 = = = = = = $ 1 1 1 1 1 1 2. An analysis of the accounts receivable balance is as follows: 20X2 20x1 LCU 31,100 Accounts Receivable: Balance at beginning of year Sales (35,000 LCU per month in 2002 and 30,000 LCU per month in 20x1) Collections Write-offs (May 20X2 and December 20X1) Balance at end of year 420,000 (412,000) (2,800) LCU 36,300 LCU 360,000 (327,400) (1,500) LCU 31,100 20x2 20x1 Allowance for Uncollectible Accounts: Balance at beginning of year Provision for uncollectible accounts Write-offs (May 20x2 and December 20X1) Balance at end of year LCU 1,100 3,000 (2,800) LCU 1,300 LCU 2,600 (1,500) LCU 1,100 3. An analysis of inventories, for which the first-in, first-out inventory method is used, follows: 20X1 Inventory at beginning of year Purchases (June 20x2 and June 20x1) Goods available for sale Inventory at end of year Cost of goods sold 20X2 LCU 72,000 325,000 LCU397,000 (77,000) LCU320,000 LCU365,000 LCU365,000 (72,000) LCU293,000 4. On January 1, 20X1, Kiner's foreign subsidiary purchased land for 21,000 LCU and plant and equipment for 160,000 LCU. On July 4, 20X2, additional equipment was purchased for 37,000 LCU. Plant and equipment is being depreciated on a straight-line basis over a 10-year period with no residual value. A full year's depreciation is taken in the year of purchase. 5. On January 15, 20X1, 7 percent bonds with a face value of 110,000 LCU were issued. These bonds mature on January 15, 20X7, and the interest is paid semiannually on July 15 and January 15. The first interest payment was made on July 15, 20X1. Required: Prepare a schedule remeasuring the selected accounts into U.S. dollars for December 31, 20x1, and December 31, 20x2, respectively, assuming the U.S. dollar is the functional currency for the foreign subsidiary. The schedule should be prepared using the following form: (Round your dollar amounts to nearest whole dollar.) KINER COMPANY'S FOREIGN SUBSIDIARY Remeasurement of Selected Captions into United States Dollars December 31, 20X2, and December 31, 20X1 Balance in Indirect Exchange Remeasured into LCUS Rate U.S. Dollars December 31, 20X1: Accounts receivable (net) 30,000 1.7 LCU = $1 Inventories, at cost 72,000 2.0 LCU = $1 Property, plant, and equipment (net) 165,000 Calculated Long-term debt 110,000 1.7 LCU = $1 Common stock 60,000 2.0 LCU = $1 December 31, 20X2: Accounts Receivable (net) 35,000 1.5 LCU = $1. Inventories, at cost 77,000 1.7 LCU = $1. Property, plant, and equipment (net) 182,300 Calculated Long-term debt 90,000 (1.5 LCU = $1 Common stock 60,000 2.0 LCU = $1
