Bentley Company owns a subsidiary in India whose balance sheets in rupees (R) for the last two
Question:
Bentley formed the subsidiary on January 1, 20X6, when the exchange rate was 30 rupees for 1 U.S. dollar. The exchange rate for 1 U.S. dollar on December 31, 20X6, and December 31, 2007, had increased to 35 rupees and 40 rupees, respectively. Income is earned evenly over the year, and the subsidiary declared no dividends during its first two years of existence.
Required
a. Present both the direct and the indirect exchange rate for the rupees for the three dates of (1) January 1, 20X6, (2) December 31, 20X6, and (3) December 31, 20X7. Did the dollar strengthen or weaken in 20X6 and in 20X7?
b. Prepare the subsidiarys translated balance sheet as of December 31, 20X6, assuming the rupee is the subsidiarys functional currency.
c. Prepare the subsidiarys translated balance sheet as of December 31, 20X7, assuming the rupee is the subsidiarys functional currency.
d. Compute the amount that 20X7s other comprehensive income would include as a result of thetranslation.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
Step by Step Answer:
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker