Question

Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....

Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency:

Sales KQ 180,000
Inventory (bought on 3/1/17) 90,000
Equipment (bought on 1/1/16) 56,000
Rent expense 12,000
Dividends (declared on 10/1/17) 22,000
Notes receivable (to be collected in 2020) 34,000
Accumulated depreciation—equipment 16,800
Salary payable 4,600
Depreciation expense 5,600

The following U.S.$ per KQ exchange rates are applicable:

January 1, 2016 $0.17
Average for 2016 0.18
January 1, 2017 0.22
March 1, 2017 0.23
October 1, 2017 0.25
December 31, 2017 0.26
Average for 2017 0.24

Lancer is preparing account balances to produce consolidated financial statements.

Assuming that the kanquo is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

Sales

Inventory

Equipment

Rent Exp

Dividends

Notes Rec

Acc Depr

Salary Payable

Dep Exp

Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

Sales

Inventory

Equipment

Rent Exp

Dividends

Notes Rec

Acc Depr

Salary Payable

Dep Exp

(Round your answers to 2 decimal places.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution :-

AER = Average Exchange Rate

CER = Current Exchange Rate

HER = Historical Exchange Rate

Particulars (a) Current Rate Method Translation (b) Temporal Method Remeasurement
Sales $0.24 (AER ) $0.24   (AER )
Inventory $0.26   ( CER ) $0.23  (HER )
Equipment $0.26   ( CER ) $0.17  (HER )
Rent expense $0.24   (AER ) $0.24   (AER )
Dividends 0.25 (HER ) $0.25  (HER )
Notes receivable $0.26   ( CER ) $0.26   ( CER )
Accumulated depreciation–equipment $0.26   ( CER ) $0.17  (HER )
Salary payable $0.26 ( CER ) $0.26   ( CER )
Depreciation expense $0.24   (AER ) $0.17  (HER )
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency: Sales KQ 150,000 Inventory (bought on 3/1/17) 75,000 Equipment (bought on 1/1/16) 50,000 Rent expense 10,000 Dividends (declared on 10/1/17) 20,000 Notes receivable (to be collected in 2020) 31,000 Accumulated depreciation—equipment 15,000 Salary payable 4,000 Depreciation expense 5,000 The following U.S.$ per KQ exchange rates...
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency: Sales KQ 150,000 Inventory (bought on 3/1/17) 75,000 Equipment (bought on 1/1/16) 50,000 Rent expense 10,000 Dividends (declared on 10/1/17) 20,000 Notes receivable (to be collected in 2020) 31,000 Accumulated depreciation—equipment 15,000 Salary payable 4,000 Depreciation expense 5,000 The following U.S.$ per KQ exchange rates...
22. A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The...
22. A subsidiary of Reynolds Inc., a U.S. company, was located in a foreign country. The local currency of this subsidiary was the Euro (€) while the functional currency of this subsidiary was the U.S. dollar. The subsidiary acquired Equipment A on January 1, 2018, for €250,000. Depreciation expense associated with Equipment A was €25,000 per year. On January 1, 2020, the subsidiary acquired Equipment B for €150,000 and Equipment B had associated depreciation expense of €10,000. The subsidiary owned...
Charles Edward Company established a subsidiary in a foreign country on January 1, 2016, by investing...
Charles Edward Company established a subsidiary in a foreign country on January 1, 2016, by investing FC 3,200,000 when the exchange rate was FC 3.5 to one U.S. dollar. No income was earned and no dividends were paid during that year, nor the next. In 2018, Charles Edward negotiated a bank loan of FC 1,000,000 on January 5, and purchased plant and equipment in the amount of FC 4,800,000 on January 8, 2018. No dividends were paid during 2018. Additional...
Newberry, Inc., whose reporting currency is the U.S. dollar ($), has a subsidiary in Argentina, whose...
Newberry, Inc., whose reporting currency is the U.S. dollar ($), has a subsidiary in Argentina, whose functional currency also is the $. The subsidiary acquires inventory on credit on November 1, 2017, for 110,000 pesos that is sold on January 17, 2018, for 125,000 pesos. The subsidiary pays for the inventory on January 31, 2018. Currency exchange rates are as follows: November 1, 2017 $ 0.22 = 1 peso December 31, 2017 0.23 = 1 January 17, 2018 0.24 =...
Charles Edward Company established a subsidiary in a foreign country on January 1, 2016, by investing...
Charles Edward Company established a subsidiary in a foreign country on January 1, 2016, by investing FC 3,200,000 when the exchange rate was FC 3.5 to one U.S. dollar. No income was earned and no dividends were paid during that year, nor the next. In 2018, Charles Edward negotiated a bank loan of FC 1,000,000 on January 5, and purchased plant and equipment in the amount of FC 4,800,000 on January 8, 2018. No dividends were paid during 2018. Additional...
Shopwell is a U.K. grocery chain that is a subsidiary of Premium Products, a U.S. company....
Shopwell is a U.K. grocery chain that is a subsidiary of Premium Products, a U.S. company. Premium’s scal year ends January 31. On February 1, 2015, Shopwell’s inventory balance consisted of £100,000 purchased when the ex-change rate was $1.60/£, and £300,000 purchased when the exchange rate was $1.62/£. Shopwell made purchases of £5,000,000 evenly throughout scal 2016, and its inventory on January 31, 2016, consisted of £350,000 purchased when the exchange rate was $1.67/£. Shopwell’s sales of inventory occurred relatively...
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by...
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 100,000 pounds. The subsidiary immediately borrowed 240,000 pounds on a five-year note with 6 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 340,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary...
A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000...
A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange rates for 1 won follow: January 1, 2017 $ 0.45 = 1 won April 1, 2017 0.46 = 1 June 1, 2017 0.47 = 1 December 31, 2017 0.49 = 1 A. Assume...
Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with...
Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 22,000 dinars, accounts receivable of 80,800 dinars, and land that cost 208,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 158,000 dinar notes payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for 128,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT