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Sendelbach Corporation is a U.S.based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates

Sendelbach Corporation is a U.S.based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2015, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows:

Main OperationCanada
Debit Credit
Accounts payable C$ 51,510
Accumulated depreciation 47,000
Buildings and equipment C$ 187,000
Cash 46,000
Common stock 70,000
Cost of goods sold 223,000
Depreciation expense 8,900
Dividends, 4/1/15 39,000
Gain on sale of equipment, 6/1/15 7,000
Inventory 99,000
Notes payabledue in 2018 89,000
Receivables 88,000
Retained earnings, 1/1/15 155,590
Salary expense 43,000
Sales 332,000
Utility expense 11,000
Branch operation 7,200
Totals C$ 752,100 C$ 752,100

Branch OperationMexico
Debit Credit
Accounts payable Ps 74,000
Accumulated depreciation 52,000
Building and equipment Ps 60,000
Cash 69,000
Depreciation expense 4,000
Inventory (beginningincome statement) 43,000
Inventory (endingincome statement) 38,000
Inventory (endingbalance sheet) 38,000
Purchases 77,000
Receivables 41,000
Salary expense 11,000
Sales 144,000
Main office 35,000
Totals Ps 343,000 Ps 343,000

Additional Information

The Canadian subsidiarys functional currency is the Canadian dollar, and Sendelbachs reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities.

The building and equipment used in the Mexican operation were acquired in 2005 when the currency exchange rate was C$0.25 = Ps 1.

Purchases should be assumed as having been made evenly throughout the fiscal year.

Beginning inventory was acquired evenly throughout 2014; ending inventory was acquired evenly throughout 2015.

The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,200 on December 31, 2015.

Currency exchange rates for 1 Ps applicable to the Mexican operation follow:

Weighted average, 2014 C$ 0.20
January 1, 2015 0.22
Weighted average rate for 2015 0.24
December 31, 2015 0.25

The December 31, 2014, consolidated balance sheet reported a cumulative translation adjustment with a $56,950 credit (positive) balance.

The subsidiarys common stock was issued in 2004 when the exchange rate was $0.49 = C$1.

The subsidiarys December 31, 2014, Retained Earnings balance was C$155,590.00, a figure that has been translated into US$66,663.

The applicable currency exchange rates for 1 C$ for translation purposes are as follows:

January 1, 2015 US$ 0.70
April 1, 2015 0.69
June 1, 2015 0.68
Weighted average rate for 2015 0.67
December 31, 2015 0.65

a.

Remeasure the Mexican operations figures into Canadian dollars. (Hint: Back into the beginning net monetary asset or liability position.) (Input all amounts as positive values.)

Canadian Dollars
Debit Credit
Accounts payable 18,500
Accumulated depreciation 13,000
Building and equipment 15,000
Cash 17,250
Depreciation expense 1,000
Inventory (beginningincome statement) 8,600
Inventory (endingincome statement) 9,120
Inventory (endingbalance sheet) 9,120
Purchases 18,480
Receivables 10,250
Salary expense 2,640
Sales 34,560
Main office 7,200
Remeasurement loss 40
Total 82,380 82,380

b.

Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency and Prepare consolidated financial statement in parent currency (that is U.S. dollars). (Round U.S. Dollar values to 2 decimal places. Amounts to be deducted and losses should be indicated with a minus sign.)

SENDELBACH CORPORATION
Financial Statements
For the Year Ended December 31, 2015
Canadian Dollar U.S. Dollar
Income Statement:
C$
C$
C$
Statement of Retained Earnings:
Retained earnings, 1/1/15 C$
Retained earnings, 12/31/15 C$ 0
Balance Sheet:
Assets:
C$
Total assets C$ 0
Liabilities and Equities:
C$
Total liabilities and equities C$ 0

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