Chapter 12 Problems

Chapter 12 Problems - Chapter 12 Problems Problem 3(a FF...

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Chapter 12 Problems Problem 3 (a) Canadian FF dollars Net monetary position Opening balance* (195,000) \$1 = FF2.9 (67,241) Sales 10,350,000 ) \$1 = FF3.25 3,184,615 ) Purchases (Note 1) (6,530,000) Note 1 (2,118,590) Other expenses (3,367,500) \$1 = FF3.25 (1,036,154) Dividends (200,000 ) \$1 = FF3.6 (55,556 ) (92,926) Less closing balance** 57,500 ) \$1 = FF3.6 15,972 Exchange gain 108,898 ) * FF350 + FF405 – FF250 – FF700 ** FF820 + FF317.5 – FF380 – FF700 Note 1: 2,000,000 / 3 + 4,530,000 / 3.12 (b) Income Statement French Canadian francs dollars Sales 10,350,000 ) \$1 = FF3.25 3,184,615 ) Cost of sales (6,400,000 ) Note 1 (2,091,513 ) 3,950,000 ) 1,093,102 ) Depreciation (122,500) \$1 = FF2.9* (42,241) Other expenses (3,367,500 ) \$1 = FF3.25 (1,036,154 ) 14,707 ) Foreign exchange gain from part (a) 108,898 Net income 123,605 Notes: 1) Opening inventory 600,000 ) \$1 = FF2.9* \$206,897

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+ Purchase #1 2,000,000 ) \$1 = FF3.0 666,667 + Purchase #2 4,530,000 ) \$1 = FF3.12 1,451,923 7,130,000 ) 2,325,487 – Closing inventory (730,000) \$1 = FF3.12 (233,974) Cost of sales 6,400,000 ) 2,091,513 ) * Both fixed assets and the opening inventory would be translated at the rate of exchange on the date of acquisition by the parent. Problem 5 (a) Translated cost Pesos Dollars 3,200,000 ÷ 341 = 9,384 6,132,000 ÷ 360 = 17,033 5,530,000 ÷ 375 = 14,747 14,862,000 41,164 Translated market 12,100,000 ÷ 392 = 30,867 The translated balance sheet would show the lower amount: Inventory 30,867 The translated income statement would show Loss from inventory write-down 10,297 (b) Translated market
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This note was uploaded on 03/10/2010 for the course ACC ACC703 taught by Professor Taylor during the Spring '10 term at Ryerson.

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Chapter 12 Problems - Chapter 12 Problems Problem 3(a FF...

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