Rowan, Inc., at December 31, year 1, have been translated into ADVANICE ACCOUNTING HOMEWORK 2. Translation of Foreign Currency CHAPTER 11&12 Slutments S dollars as follows: Prepaid rent Translated at Current Historical rates rates Noto receivable, long-term $240,000 $200,000 85.000 80,000 Patent 150,000 170,000 $475,000 $450,000 The subsidiary's functional currency is the currency of the country in which it is located. What total amount should be ciuded in Rowan's December 31, year I consolidated bal ce sboet for the above accounts? $450,000 $455,000 c. $475,000 d. $495.000 7. When romansuring foreign currency financial sements into the functional currency, which of the following items would be remesund using historical exchange rate? Inventories carried at cost. Maritable equity securities reported at market values Bands payable d Accrund liabilities Which of the following should be reported as a stockhold- sequity account? L Discount on convertible bonds. h Premium on convertible boods. c. Cumulative foreign exchange translation loss d. Organization costs & Park Co's wholly owned subsidiary, Schnell Corp.main- tains its accounting records in curos. Because all of Schell's branch offices are in Switzerland, its functional carcis the Swiss franc. Remcosurement of Schnell's year I financial statements resulted in a 57.600 gain, and translation of its financial statements resulted in an 58,100 gain. What amount should Park reports a foreign exchange gains et income in is income statement for the year ended December 31. year 12 SO b. $7.600 c. $8,100 d. S15,700 4. A foreign subsidiary's functional currency is its local currency, which has not experienced significant inflation. The weighted average exchange rate for the current year would be the appropriato exchange rate for translating Sales to customers Wages expense No Yes Yes Yes Yes No No PPPP No E.2. Translation of Foreign Currency 1. Certain balance sheet accounts of a foreign subsidiary of Rowan, Inc., at December 31, year 1, have been translated into ADVANICE ACCOUNTING HOME Statements US dollars as follows: Prepaid rent Translated at Current Historical rates rates Note receivable, long-term $240,000 $200,000 85,000 80,000 Patent 150,000 170,000 $475,000 $450,000 The subsidiary's functional currency is the currency of the country in which it is located. What total amount should be included in Rowan's December 31, year 1 consolidated bal- ance sheet for the above accounts? a. $450,000 b. $455,000 c. $475,000 d. $495,000 8. Park Co.'s wholly owned subsidiary, Schnell Corp., main- tains its accounting records in euros. Because all of Schnell's branch offices are in Switzerland, its functional currency is the Swiss franc. Remeasurement of Schnell's year 1 financial statements resulted in a $7,600 gain, and translation of its financial statements resulted in an $8,100 gain. What amount should Park report as a foreign exchange gain as net income in its income statement for the year ended December 31, year 1? a. $0 b. $7,600 c. $8,100 d. $15,700 7. When remeasuring foreign currency financial statements into the functional currency, which of the following items would be remeasured using historical exchange rate? a. Inventories carried at cost. b. Marketable equity securities reported at market values. c. Bonds payable. d. Accrued liabilities. 4. A foreign subsidiary's functional currency is its local currency, which has not experienced significant inflation. The weighted-average exchange rate for the current year would be the appropriate exchange rate for translating Sales to customers Wages expense No No b. Yes Yes No Yes d. Yes No a
