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Phi, a U.S. firm, acquired 100 percent of Stu's outstanding stock at book value on January 1, 2016, for $112,000. Stu is a New Zealand-based

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Phi, a U.S. firm, acquired 100 percent of Stu's outstanding stock at book value on January 1, 2016, for $112,000. Stu is a New Zealand-based company, and its functional currency is the U.S. dollar. The exchange rate for New Zealand dollars (NZ$) was $0.70 when Phi acquired its interest. Stu's stockhold- ers' equity on January 1, 2016, consisted of NZ$150,000 capital stock and NZ$10,000 retained earnings. The adjusted trial balance for Stu at December 31, 2016, is as follows: Debits Cash Accounts receivable-net Inventories Prepaid expenses Land Equipment Cost of sales Depreciation expense Other operating expenses Dividends NZ$15,000 60,000 30,000 10,000 45,000 60,000 120,000 12,000 28,000 20,000 NZ$400,000 Credits Accumulated depreciation Accounts payable Capital stock Retained earnings Sales NZ$22,000 18,000 150,000 10,000 200,000 NZ$400.000 ADDITIONAL INFORMATION 1. Prepaid expenses (supplies) of NZ$18,000 were on hand when Phi acquired Stu. Other operating expenses include NZ$8,000 of these supplies that were used in 2016. The remaining NZ$10,000 of supplies is on hand at year-end. 2. The NZ$120,000 cost of sales consists of NZ$50,000 inventory on hand at January 1, 2016, and NZ$100,000 in purchases during the year, less NZ$30,000 ending inventory that was acquired when the exchange rate was $0.66. 3. The NZ$60,000 of equipment consists of NZ$50,000 included in the business combination and NZ$10,000 purchased during 2016, when the exchange rate was $0.68. A depreciation rate of 20 percent is applicable to all equipment for 2016. 4. Exchange rates for 2016 are summarized as follows: $0.70 Current exchange rate, January 1, 2016 Exchange rate when new equipment was acquired Average exchange rate for 2016 Exchange rate for December 31, 2016, inventory Exchange rate for dividends Current exchange rate, December 31, 2016 0.68 0.67 0.66 0.66 0.65 REQUIRED: Prepare a worksheet to remeasure the adjusted trial balance of Stu Corporation into U.S. dol- lars at December 31, 2016. Worksheet assuming NZ$ is the functional currency (current rate method)- Stu Company Translation Worksheet for 2016 NZ$ Exchange Rate U.S. $. Income Statement: Sales 200,000 Cost of sales. (120,000) Depreciation expenses (12,000) Other operating expenses (28,000) Net Income 40,000 Retained Earnings Statement: Retained Earnings, Jan. 1. Net Income Dividends (declared), Retained Earnings, Dec. 31. 10,000 40,000 (20,000) 30,000 Balance Sheet: Cash Accounts receivable-net. Inventories Prepaid expenses Land. Equipment Accumulated depreciation. Total Assets Accounts payable Capital stock Retained Earnings, Dec. 31.. 15,000 60,000 30,000 10,000 45,000 60,000 (22,000) 198,000 18,000 150,000 30,000 Total Liabilities & Stockholders' Equity 198,000 codes: C = current rate; H = historical rate; A = average rate- Worksheet assuming US $ is the functional currency (temporal method) Stu Company Translation Worksheet for 2016 NZ$ Exchange Rate U.S. $. Income Statement:. Sales Cost of sales Depreciation expense. Other operating expenses. 200,000 (120,000) (12,000). (28,000) 12 2 40,000 10,000 40,000 (20,000). 30,000 Net Income Retained Earnings Statement:.. Retained Earnings, Jan. 1. Net Income Dividends (declared). Retained Earnings, Dec. 31.. Balance Sheet: Cash Accounts receivable-net.. Inventories. Prepaid expenses Land Equipment Accumulated depreciation Total Assets Accounts payable. Capital stock Retained Earnings, Dec. 31 15,000 60,000 30,000 10,000 45,000 60,000 (22,000) 198,000 18,000 150,000 30,000 Total Liabilities & Stockholders' Equity 198,000 * codes: C = current rate; H = historical rate; A = average rate

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