# CHAPTER 20 - CHAPTER 20 MULTIPLE CHOICE 20-1 b Bad debt...

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CHAPTER 20 MULTIPLE CHOICE 20-1: b Bad debt expense (S\$ 6,000 x P28.20) P169,200 Amortization of patents (S\$ 4,000 x P28.20) 112,800 Rent expense (S\$ 10,000 x P28.20) 282,000 Total P564,000 Average rate (P28.20) is used to translate all expenses since this is a reasonable estimation. 20-2: b Machinery [(24,000 Ringgit ÷ 10) x P10.42] P 25,008 Equipment [(12,000 Ringgit ÷ 10) x P10.42] 12,504 Total depreciation P 37,512 20-3: d Accounts receivable P120,000 Prepaid expenses 55,000 Property and equipment (net) 275,000 Total P450,000 20-4: a Depreciation expense (H\$ 12,000 x P5.80) P 69,600 Bad debts (H\$ 8,000 x P5.80) 46,400 Rent (H\$ 20,000 x P5.80) 116,000 Total P232,000 Average rate for the year is used in translating depreciation expense because this is more reasonable estimation than the rate when the related asset was acquired (P4.80). 20-5: d [25,000 LCU x (1 ÷ 2)] 20-6: d Long-term receivable: [1,500,000 LCU x (1 ÷ 1.5 LCU)] P1,000,000 Long-term debt: [2,400,000 LCU x (1 ÷ 1.5 LCU)] P1,600,000 20-7: b (NT Dollar 10,000 x P1.70) 131

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20-8: b Beginning inventory 40,000 Rupee Purchases 300,000 Goods available for sale 340,000 Ending inventory 30,000 Cost of goods sold 310,000 Rupee Translated cost of goods sold (310,000 Rupee x P.5745) P178,095 20-9: c NZ Dollar Rate Phil Peso Net assets, 1/1/05 20,000 P15 P300,000 Increase in net assets: Net income, 2005 (30,000 – 20,000) 10,000 P19 190,000 Net assets 12/31/05 30,000 P490,000 Net assets at current rate 30,000 P21 630,000 Translation adjustment, 2005 (positive) P140,000 20-10: b Equipment [800,000 x (1 ÷ 50)] P16,000 Accumulated depreciation [560,000 x (1 ÷ 50)] P11,200 Depreciation [80,000 x (1÷ 50)] P 1,600 20-11: a (25,000 Rupee x P1.24) 20-12: d (5,000 Rupee x P1.30) 20-13: c Investment cost, Jan. 1, 2005 P402,000 Less: Book and fair value of net assets acquired (300,000 Rp x P1.20) 360,000 Goodwill P 42,000 Pesos Rupee Goodwill P42,000 35.000 (P42,000 / P1.20) Impairment 4,340 (3,500 Rp x P1.24) 3,500 Balance P37,660 31,500 Translated balance (31,500 Rp x P1.32) P41,580 Less: umimpaired goodwill 37,660 Translation adjustment P 3,920 132
20-14: b Translation adjustment from translating the trial balance P12,000 Cr Translation adjustment from translating goodwill (per 20-13) 3,920 Cr Total translation adjustment P15,920 20-15: b Investment in Subsidiary account, Jan. 1, 2005 P1,600,000 Share in subsidiary net income [(800,000 yen x 70%) x P.57] 319,200 Translation adjustment (P25,000 x 70%) 17,500 Share of subsidiary dividends [(50,000 yen x 70%) x P.59] ( 20,650 ) Investment in Subsidiary account, December 31, 2005 P1,916,050 20-16: d 20-17: a Phil Peso Thailand Baht Initial inventory transfer date: Selling price P120,000÷1.60 75,000 B Cost (80,000 ) Profit 40,000 Balance sheet date (75,000 x 1.70) 127,500 75,000 B 20-18: a (P127,500 – 40,000) 20-19: a Yen Exchange Rate Phil Peso Net asset beginning 200,000 .44 88,000 Net income 200,000 .46 92,000 Net asset translated at rate: During the year 400,000 180,000 At end of year 400,000 .48 192,000 Translation adjustment (credit) (12,000 ) 20-20: a (70,000 rupee x P1.50) 20-21: c Investment cost P1,210,000 Book value of interest acquired (1,100,000 x 1.10) x .80 968,000 Goodwill 242,000 133

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PROBLEMS Problem 20-1 a. Pilipino Company Translation Working Paper December 31, 2005 Yen Exchange Rate Phil. Pesos Cash 40,000 .40 CR 16,000 Accounts receivable 120,000 .40 CR 48,000 Inventory 100,000 .40 CR 40,000 Plant and equipment 700,000 .40 CR 280,000 Cost of sales 360,000 .425 AR 153,000 Operating expenses 140,000 .425 AR 59,500 Depreciation expenses 60,000 .425 AR 25,500 Total 1,520,000 622,000 Accumulated Other Comprehensive Income - Translation Adjustment 25,000 Total debits 647,000
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## This note was uploaded on 08/12/2010 for the course ACC 452 taught by Professor Mr.cula during the Spring '10 term at Abraham Baldwin Agricultural College.

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CHAPTER 20 - CHAPTER 20 MULTIPLE CHOICE 20-1 b Bad debt...

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