Question
S. Lopez Enterprises is a publicly-traded U.S. corporation that has 100% ownership interest in two companies located in Mexico. Both subsidiaries maintain their accounting records
S. Lopez Enterprises is a publicly-traded U.S. corporation that has 100% ownership interest in two companies located in Mexico. Both subsidiaries maintain their accounting records in the Mexican peso.
At December 31, 2020, S. Lopez Enterprises must convert the financial statements for the subsidiaries to U.S. dollars prior to consolidation.
Here are the exchange rates relevant to the conversion of the financial statements of both subsidiaries:
|
| $ per MXN |
| Historical rate for plant assets and equity | $ 0.085 |
| Historical rate for beginning inventory | $ 0.088 |
| Weighted-average rate for 2020 | $ 0.090 |
| Current rate at December 31, 2020 | $ 0.092 |
Presented below are summarized versions of the financial statements of Camino Grande Ltd. that have been partially-converted to U. S. dollars. Use the remeasurement method to complete the conversion of the financial statements of Camino Grande Ltd.
- Enter the appropriate amounts in each unshaded box.
- Provide supporting calculations in the box in the right column.
- Refer back to the source of amounts that carry over from one statement to another
- One of the unshaded boxes pertains to an item that is not applicable under the remeasurement method and therefore will NOT contain a value. (14 points)
| Statement of Financial Position at December 31, 2020: | Mexican Pesos | U.S. Dollars | Calculations |
| Total Assets | 72,725,540 | $6,412,340 |
|
| Total Liabilities | 40,237,305 | $3,598,830 |
|
| Common Stock | 20,520,000 | $1,744,200 |
|
| Retained Earnings | 11,968,235 |
|
|
| Accumulated Other Comprehensive Income (Loss),if any | -0- |
|
|
| Total Equity | 32,488,235 |
|
|
| Statement of Retained Earnings for the year ended December 31, 2020: | Mexican Pesos | U.S. Dollars | Calculations |
| Retained Earnings, January 1, 2020 | 7,125,810 | $624,740 |
|
| Net Earnings | 10,942,425 |
|
|
| Dividends Declared | (6,000,000) | (540,000) |
|
| Retained Earnings, December 31, 2020 | 11,968,235 |
|
|
| Income Statement for the year ended December 31, 2020: | Mexican Pesos | U.S. Dollars | Calculations |
| Net Earnings Before Exchange Gain (Loss),if any | 10,942,425 | $962,455 |
|
| Exchange Gain (Loss),if any | -0- |
|
|
| Net Earnings | 10,942,425 |
|
|
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Financial Accounting
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
7th Edition
1118725786, 978-1118725788
