500 Chapter 10
a. Determine the translation adjustment to be reported on Stephanie’s December 31. 2015,
consolidated balance sheet. assuming that the Swiss franc is the Swiss subsidiary's f unc-
tional currency. What is the economic relevance of this tran
458 Chapter 10
generally are required to comply with the laws and regulations of the foreign country.
For example, most countries require companies to prepare financial statements in the
local currency using local accounting rules.
To prepare worldw
Chapter 5 readings. Excerpts from Hoyle, Schaefer, Doupnik, 11th edition. 2013
Our textbook focuses on worksheet entries (using the gold group's method). I omitted most of the text about
worksheet entries. For those who want to follow the discussion in th
a . The translation adjustment is based on changes in the net assets (exposed position) of the subsidiary:
Calculation of translation adjustment (current rate method)
Net assets, ending (at ending current rate)
a1. Prepare 2015 financial statements for this Swiss company converted into US dollars (Use the current rate method)
Calculation of translation adjustment (Current Rate method)
Net assets, beginning (at begi
(current rate method)
Solutions to chapter 14 problems 5, 7, 8, and 10
5. Answer is D
We need to calculate goodwill. Based on Davids contribution, the companys implied value is $350,000
($105,000 30%) which is less than the capital balances ($315,000 in original capita
a. Placid Lake's 2015 net income before effect from Scenic .
Scenic's reported net income 2015 .
Amortization expense (given) .
Realization of 2014 intra-entity gross profit (see below) .
Deferral of 2015 intra-entity gross profit (see below) .