Chapters 12-14 - 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12....

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E12-2 E12-3 E12-4 1. b/d H b 2. d/b G c 3. c/a F a 4. a D a 5. b E d 6. a B c 7. C b 8. B 9. D 10. E 11. J 12. C E12-9 Swiss Francs U.S. Dollars Debits Credits Rate Debits Credits Cash 7,000 0.73 5,110 A/R 20,000 0.73 14,600 A/R from affiliate 5,000 0.73 3,650 Inventory 25,000 0.73 18,250 Plant and equipment 100,000 0.73 73,000 Acc depreciation 10,000 0.73 7,300 A/P 12,000 0.73 8,760 Bonds payable 50,000 0.73 36,500 Common stock 60,000 0.80 48,000 Sales 150,000 0.75 112,500 CoGS 70,000 0.75 52,500 Depreciation expense 10,000 0.75 7,500 Operating expenses 30,000 0.75 22,500 Dividends 15,000 0.74 11,100 Subtotal 282,000 282,000 208,210 213,060 Accumulated other comprehensive loss, translation adjustment 4,850 Total 213,060 213,060 In contrast to E12-5 (done in class 11/29), the strengthening U.S. dollar creates an equity loss; the Swiss Francs are becoming less valuable as the foreign subsidiary is earning them. E12-12 Investment in Thames Company 400,000 Cash 400,000 a. Cash 19,680 [15K GBP x 80% x $1.6 Investment in Thames Company 19,680
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b. Investment in Thames Company 48,000 [$60,000 x 80%] Investment income - Thames 48,000 AOCI - translation adjustment 5,120 [$6,400 x 80%] Investment in Thames Company 5,120 c. The initial amount of the differential was $48,000, which is 30,000 GBP (30,000 x 1.60 = 48,000). 30,000 GBP / 10 years = 3,000 GBP amortization per year. 3,000 x 1.63 = 4,890 30,000 (3,000) 27,000 x 1.65 = 44,550 Intangible beginning balance (USD) 48,000 Amortization expense (USD) (4,890) Ending balance before translation 43,110 Ending balance (USD, per above) 44,550 Translation gain 1,440 Investment in Thames Company 1,440 AOCI - translation adjustment 1,440 d. Income from subsidiary 4,890 Investment in Thames Company 4,890 e. AOCI - translation 5,120 1,440 3,680 Other comprehensive loss (debit balance) E12-13 a. Indirect Direct rate rate (given) (1/Ind. rate) 1/1/X6 30.00 0.033 12/31/X6 35.00 0.029 12/31/X7 40.00 0.025 b. Rupees U.S. Dollars Debits Credits Rate Debits Credits
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Chapters 12-14 - 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12....

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