View the step-by-step solution to:

QUESTION 2 CURRENCY TRANSLATION Attached are the summarized financial statements of Forex Co.

QUESTION 2 CURRENCY TRANSLATION


Attached are the summarized financial statements of Forex Co. in its local currency, the florin, at the acquisition date and the start and the end of the 2021 financial year. Forex is an 80% owned subsidiary of Findex, a US reporting entity. Findex acquired Forex on January 1, 2019.


Other information:

On June 30, 2021, Forex acquired new plant for $66,000 by issuing a note payable to the supplier and paying cash. No plant was sold. All the old plant is depreciated over a remaining ten year useful life from January 1, 2019. The new plant is also depreciated over a ten year life with no residual value.


Local sales, local purchases, other local operating expenses and taxation may be assumed to have occurred evenly throughout the accounting period.


Inventory on hand was all acquired from the parent company. There was no inventory acquired locally at either the beginning or the end of the year. Inventory received from the parent company held at December 31, 2020 was purchased on December 1, 2020. Inventory received from the parent company held at December 31, 2021 was purchased on December 1, 2021.


Sales to the parent company are billed in dollars. Per the parent's record the value in dollars of these sales was $850,000. Purchases from the parent company may be assumed to have occurred evenly throughout the accounting period. The receivable from the parent is also designated in US dollars.


Dividends were paid on December 31, 2021.


These remeasured financial statements are being prepared for inclusion in the consolidated financial statements of Findex. 


Exchange rates were as follows:

Jan 1, 2019 $2.00 per florin

December 1 2020 2.10

December 31.2020 2.20

Average 2021 and June 30 2.35

December 1 2021 2.38

December 31 2021 2.40


REQUIRED


ASSUMING THE FUNCTIONAL CURRENCY IS THE US DOLLAR


A. In a worksheet, remeasure the December 31, 2020 balance sheet into US dollars.

B. In a worksheet, remeasure the December 31, 2021 financial statements into US dollars.

C. Verify your gain by examining the change on the net monetary assets/liabilities in the year.




sheet1.PNG


sheet2.PNG

sheet3.PNG

sheet1.PNG

sheet2.PNG

sheet3.PNG

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question