Question

On January 1, 20X5, Pop Company of Regina, Saskatchewan, purchased 80% of the out-standing shares of Soda Limited of Switzerland. Soda’s statements of financial position as at December 31, 20X4, and December 31, 20X5, and Soda’s 20X5 statements of comprehensive income and retained earnings follow:
Soda Ltd.
Statement of Financial Position
at December 31


Soda Ltd.
Statement of Comprehensive Income and Retained Earnings
Year ended December 31, 20X5
Sales.................................................................................................................. SF500,000
Cost of sales...................................................................................................... (280,000)
Amortization..................................................................................................... (50,000)
Other expenses................................................................................................. (20,000)
Net income....................................................................................................... 150,000
Retained earnings, January 1, 20X5................................................................ 95,000
......................................................................................................................... 245,000
Dividends paid................................................................................................ 70,000
Retained earnings, December 31, 20X5.......................................................... SF175,000
Additional Information
1. Soda was incorporated on January 1, 20X2, at which time it acquired all of its equipment and issued its 10- year bonds.
2. Soda’s purchases and sales occurred evenly during 20X5. Soda’s December 31, 20X4, and December 31, 20X5, inventory was acquired evenly over the final six months of 20X4 and 20X5, respectively.
3. Dividends were paid on July 1, 20X5. Ignore income taxes.
4. Foreign exchange rates were as follows:
January 1, 20X2................................................................................................ SF1 = C$ 0.90
Average for July–December 20X4.................................................................... SF1 = C$ 0.92
December 31, 20X4/ January 1, 20X5............................................................... SF1 = C$ 0.94
July 1, 20X5....................................................................................................... SF1 = C$ 0.98
December 31, 20X5........................................................................................... SF1 = C$ 1.02
Average for July–December 20X5................................................................... SF1 = C$ 1.00
Average for 20X5............................................................................................ SF1 = C$ 0.99

Required
1. Translate the liabilities and shareholders’ equity of Soda as at December 31, 20X5, assuming that Soda’s functional currency is the Swiss franc. Include a calculation of the cumulative translation adjustment.
2. Translate the following accounts from the financial statements of Soda for the year ended December 31, 20X5, assuming that Soda’s functional currency is the Canadian dollar:
a) Cost of sales
b) Amortization expense
c) Bondspayable


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  • CreatedMarch 13, 2015
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