Question
Translated and Remeasured Trial Balances The Thode Company established a wholly-owned subsidiary in Saudi Arabia on January 1, 2019, when the exchange rate was $0.30/riyal
Translated and Remeasured Trial Balances
The Thode Company established a wholly-owned subsidiary in Saudi Arabia on January 1, 2019, when the exchange rate was $0.30/riyal (SAR). Of Thode's initial SAR200,000,000 investment, SAR100,000,000 was used to acquire plant assets (tenyear life) and SAR50,000,000 was used to acquire inventory. The remaining amount was initially held as cash by the subsidiary.
During 2019, the subsidiary reported net income of SAR20,000,000. Inventory purchases of SAR15,000,000 were made evenly during the year. It paid dividends of SAR10,000,000 on September 30, when the exchange rate was $0.255/SAR. No other transactions occurred between the subsidiary and the parent. The subsidiary's condensed income statement appears below:
SalesSAR85,000,000Cost of goods sold (1)(40,000,000)Depreciation expense (2)(10,000,000)Other cash expenses(15,000,000)Net incomeSAR20,000,000
(1) Assume a FIFO inventory flow assumption.
(2) Relates solely to plant assets acquired on January 1, 2019.
The average rate during the year was $0.265/SAR. On the balance sheet date, it was $0.25/SAR.
(a) Assuming the functional currency is the riyal, translate the subsidiary's preclosing trial balance at December31, 2019, and prepare schedule calculating the subsidiary's translation gain or loss for 2019.
- Use negative signswith your Cr (credit balance) answers, in the P Dr(Cr) and $ Dr(Cr) columns only.
- Enter answers using all zeros (do not abbreviate answers to millions or thousands).
December 31, 2019
Translated Trial Balance
SAR
Dr (Cr)$/SAR$
Dr (Cr)CashSARAnswer
Answer
$Answer
InventoryAnswer
Answer
Answer
Plant assetsAnswer
Answer
Answer
CapitalAnswer
Answer
Answer
DividendsAnswer
Answer
Answer
SalesAnswer
Answer
Answer
Cost of goods soldAnswer
Answer
Answer
Depreciation expenseAnswer
Answer
Answer
Other expensesAnswer
Answer
Answer
Other comprehensive (income) or lossbelowAnswer
Net incomeSARAnswer
$Answer
Instructions for Translation Gain/Loss Schedule:
- Use negative signs with answers to indicate a negative exposed position balance.
- Use negative signs with answers to indicate an amount that reduces the exposed position balance.
- Using the drop-down menu, select the appropriate answer to indicate a translation gain or translation loss.
- Do not use a negative signwith your translation gain or translation loss answer.
- Enter answers using all zeros (do not abbreviate to millions or thousands).
Translation Gain/Loss ScheduleSAR$/SAR$Exposed position, beginningSARAnswer
Answer
$Answer
Net IncomeAnswer
Answer
Answer
DividendsAnswer
Answer
Answer
Answer
Exposed position, endingSARAnswer
Answer
Answer
Answer
Translation gain
Translation loss
$Answer
(b)Assuming the functional currency is the U.S. dollar, remeasure the subsidiary's preclosing trial balanceat December 31, 2019, and prepare a schedule calculating the subsidiary's remeasurement gainor loss for 2019.
- Use negative signswith your Cr (credit balance) answers, in the P Dr(Cr) and $ Dr(Cr) columns only.
- Enter answers using all zeros (do not abbreviate answers to millions or thousands).
December 31, 2019
Remeasured Trial Balance
SAR
Dr (Cr)$/SAR$
Dr (Cr)CashSARAnswer
Answer
$Answer
InventoryAnswer
Answer
Plant assetsAnswer
Answer
Answer
CapitalAnswer
Answer
Answer
DividendsAnswer
Answer
Answer
SalesAnswer
Answer
Answer
Cost of goods soldAnswer
Answer
Answer
Depreciation expenseAnswer
Answer
Answer
Other expensesAnswer
Answer
Answer
Remeasurement (gain) or lossbelowAnswer
SARAnswer
$Answer
Instructions for Remeasurement Gain/Loss Schedule:
- Use negative signs with answers to indicate a negative exposed position balance.
- Use negative signs with answers to indicate an amount that reduces the exposed position balance.
- Using the drop-down menu, select the appropriate answer to indicate a remeasurement gain or remeasurement loss.
- Do not use a negative signwith your remeasurement gain or remeasurement loss answer.
- Enter answers using all zeros (do not abbreviate to millions or thousands).
Remeasurement Gain/LossSAR$/SAR$Exposed position, beginningSARAnswer
Answer
$Answer
SalesAnswer
Answer
Answer
PurchasesAnswer
Answer
Answer
Cash expensesAnswer
Answer
Answer
DividendsAnswer
Answer
Answer
Answer
Exposed position, endingSARAnswer
Answer
Answer
Answer
Remeasurment gain
Remeasurement loss
$Answer
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Governmental And Nonprofit Accounting Theory And Practice
Authors: Robert J Freeman, Craig D Shoulders, Gregory S Allison, Terry K Patton, Robert Smith,
9th Edition
0132552728, 9780132552721
