2011 week 10 FOREIGN CURRENCY TRANSACTIONS

All amounts except depreciation occurred evenly

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Unformatted text preview: d by Bryan Inc., a Canadian corporation. All amounts except depreciation occurred evenly throughout the year. Interest was paid at year-end. The opening inventory was purchased on October 1, 20x5; the ending inventory was purchased on November 1, 20x6. The depreciable assets were purchased when the exchange rate was $0.60. The common shares were issued when the exchange rate was $0.50. The land was purchased at the end of 20x6. The bonds were issued at the end of 20x4 and mature at the end of the year 20x10. Dividends are declared and paid at the end of each year. Other exchange rate information is as follows: © CMA Ontario, 2011 8 of 20 CMA Accelerated Program - 2011/2012 December 31, 20x4 October 1, 20x5 December 31, 20x5 Average for 20x6 November 1, 20x6 December 31, 20x6 Lecture Student Weekly File - Week 10 $ 0.60 0.72 0.75 0.80 0.83 0.85 Required: Prepare a translated income statement, statement of retained earnings and Statement of Financial Position for Hilary Company for the year ending December 31, 20x6 assuming that … 1. Hilary Company’s functional currency is the Canadian dollar 2. Hilary Company’s functional currency is the Swiss Franc, and that the cumulative translation adjustment at December 31, 20x5 is $155,000 credit. © CMA Ontario, 2011 9 of 20 CMA Accelerated Program - 2011/2012 Lecture Student Weekly File - Week 10 Financial Accounting - Module 2 Translation Methodology when the functional currency = the local currency (current rate method) • use when the functional currency = the foreign currency where the foreign operation operates • income statement: translate all accounts at average rate • assets and liabilities: translate at current rate • common stock and retained earnings: same as for the temporal method • any amount required to balance is debited/credited to the ‘Cumulative Translation Adjustment’ which is part of OCI – note that this amount can be calculated 70 1 © CMA Ontario, 2011 10 of 20 CMA Accelerated Program - 2011/2012 Lecture Student Weekly File - Week 10 Problem 10 – Investments On December 31, 20x2, the Peters Company purchased 60 percent of the outstanding...
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This note was uploaded on 01/07/2014 for the course ACCOUNTING 346 taught by Professor William during the Fall '12 term at DeVry Chicago.

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