Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, Dandu Corporation started a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory at a cost of 120,000 local

On January 1, Dandu Corporation started a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory at a cost of 120,000 local currency units (LCU). One-fourth of this inventory remained unsold at the end of the year while 40 percent of the liability from the purchase had not yet been paid. The U.S. $ per LCU exchange rates were as follows:

January 1 $0.40
April 1 0.38
Average for the current year 0.36
December 31 0.35

What should be the December 31 Inventory and Accounts Payable balances for this foreign subsidiary as translated into U.S. dollars using the current rate method?

Inventory =

Accounts payable =

Board Company has a foreign subsidiary that began operations at the start of 2015 with assets of 132,000 kites (the local currency unit) and liabilities of 54,000 kites. During this initial year of operation, the subsidiary reported a profit of 26,000 kites. It distributed two dividends, each for 5,000 kites with one dividend declared on March 1 and the other on October 1. Applicable exchange rates for 1 kite follow:

January 1, 2015 (start of business) $0.80
March 1, 2015 0.78
Weighted average rate for 2015 0.77
October 1, 2015 0.76
December 31, 2015 0.75
a.

Assume that the kite is this subsidiarys functional currency. What translation adjustment would board report for the year 2015?

Transaction Adjustment = - or + plus amount =

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

Accounting And Social Theory An Introduction

Authors: Lisa Jack

1st Edition

1138100714, 9781138100718

More Books

Students also viewed these Accounting questions

Question

6. How can hidden knowledge guide our actions?

Answered: 1 week ago

Question

7. How can the models we use have a detrimental effect on others?

Answered: 1 week ago