2011 week 10 FOREIGN CURRENCY TRANSACTIONS

Fixed assets net income 700000 450000 70000 28000

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: n sale of fixed assets Net income 700,000 (450,000) (70,000) (28,000) (72,000) 20,000 100,000 Additional Information 1. The inventory is on a FIFO basis. The opening inventory was 175,000 CORB at 1 CORB = $0.700 and 200,000 CORB at 1 CORB = $0.729. The purchases during 20x2 were 350,000 CORB at 1 CORB = $0.686, 240,000 CORB at 1 CORB = $0.660 and 135,000 CORB at 1 CORB = $0.673. © CMA Ontario, 2011 18 of 20 CMA Accelerated Program - 2011/2012 Lecture Student Weekly File - Week 10 2. The fixed asset account is composed of land, 345,000 CORB which was purchased when the exchange rate was 1 CORB = $0.449 and buildings and equipment, 1,135,000 CORB purchased when the exchange rate was 1 CORB = $0.479. There have been no fixed asset acquisitions since January 1, 20x1. 3. The long-term liabilities were issued on January 1, 20x1. On July 1, 20x2 the longterm debt was reduced by 100,000 CORB. On April 1, 20x2, fixed assets were sold for proceeds of 40,000 CORB. Exchange rates are as follows: January 1, 20x1 July 1, 20x1 =Average for 20x1 December 31, 20x1 April 1, 20x2 July 1, 20x2 = Average for 20x2 Average for Jan-Jun 20x2 Average for Jul- Dec 20x2 December 31, 20x2 1 CORB = $0.625 1 CORB = $0.673 1 CORB = $0.745 1 CORB = $0.725 1 CORB = $0.686 1 CORB = $0.700 1 CORB = $0.670 1 CORB = $0.660 Part (A) Prepare a translated income statement assuming that Forsub’s functional currency is te Canadian dollar. Part (B) Use the same data as in Part (A), but assume that Forsub’s functional currency is the CORB. Forsub earned 250,000 CORB in 20x1 and declared and paid dividends of 100,000 CORB on December 31, 20x1. Calculate the balance in the Cumulative translation gain/loss account . © CMA Ontario, 2011 19 of 20 CMA Accelerated Program - 2011/2012 Lecture Student Weekly File - Week 10 Problem 20 – Foreign Currency Transactions On September 1, 20x5 you order a machine from a Swiss supplier. The cost of the machine is SF1,000,000. The machine is received on November 30, 30x5. You pay the invoice on March 31, 20x6. Your year-end is December 31. The following rates are available: Spot Sep 1, 20x5 Nov 30, 20x5 Dec 31, 20x5 Mar 31, 20x6 1SF = $0.75 1SF = $0.86 1SF = $0.92 1SF = $1.02 Forward Sep 1 (7 months) Oct 31 (5 months) Nov 30 (4 months) Dec 31 (3 months) 1SF = $0.82 1SF = $0.90 1SF = $0.97 1SF = $0.99 Required – Prepare all journal entries for the above transactions assuming that … a. no forward contract is taken out to offset the payable. b. a forward contract is taken out to offset the payable on November 30, the day the goods are received. © CMA Ontario, 2011 20 of 20...
View Full Document

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.

Ask a homework question - tutors are online