Question

Hamburger inc owns pasta inc a subsidiary in Italy which was established January 1, 2010. Pastas...

Hamburger inc owns pasta inc a subsidiary in Italy which was established January 1, 2010.
Pastas balance sheet as of 12/31/10 in euros.
Cash. 1,500
Accounts rec 1,600
Inventory 2,400
Fixed assets 9,000
Accumulated depreciation 1,000

Accounts payable 3,000
Long term debt 6,000
Capital stock. 3,000
Retained earnings 1,500

Pastas income statement items for 2010 in euros
Sales 20,000
Cogs 14,000
SG&aexpenses 2,500
Depreciation expense 1,000
Interest expense 500
Income tax expense 500

There was no beginning inventory. Inventory is carried at cost was acquired evenly during the last quarter of 2010
Purchases were made evenly throughout the yeAr.
Fixed assets were acquired on January 1 2010
Capital stock was sold on January 1.2010
Exchange rates US dollar per Euro
January 1,2010. $0.90
Average for 4th quarter 2010 $0.87
Average for 2010 $0.89
December 31,2010 $0.82

Show the income statement and balance sheet using the temporal method
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Answer #1

using the temporal method:

Balance Sheet as of 12/31/10
Assets: Euro Exch. Rate Dollar
Cash 1500 0.89 1335
AR 1600 0.89 1424
Inventory 2400 0.87 2088
FA 9000 0.9 8100
Acc Dep -1000 0.89 -890
Total Assets 13500 12057
Liabilities:
AP 3000 0.87 2610
LT Debt 6000 0.89 5340
Capi Stock 3000 0.9 2700
RE 1500 0.89 1335
add:Exchange gain    72
Total Liabilities 13500 12057
Income Statement for 2010:
Euro Exch. Rate Dollar
Sales 20000 0.89 17800
less COGS 14000 0.89 12460
GP 6000 5340
Less Exp.
SG&Ad. 2500 0.89 2225
Depre 1000 0.89 890
Interest 500 0.89 445
IT exp 500 0.89 445
Total exp 4500 4005
NI 1500 1335
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