ABC Inc. is a Kuwait based Company established a wholly owned overseas subsidiary XYZ Ltd on...
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ABC Inc. is a Kuwait based Company established a wholly owned overseas subsidiary XYZ Ltd on 1 January 2010 in UK (share capital was issued on this date). The summary financial statements of XYZ at 31 December 2023 are as follows these statements are presented in British Pound. Assets Cash A/R - Net Inventory Investment at FV Plant property and equipment- Accumulated depreciation) 31 December 2023 BP 1,500,000 2,000,000 750,000 400,000 3,400,000 cost (1,200,000) Total Assets 6,850,000 Liabilities Accounts payable 400,000 Bonds Payable 1,500,000 Unearned revenue 200,000 Equity Share capital 1,000,000 Share premium 1,000,000 Retained Earnings 2,750,000 Total liabilities and equity 6,850,000 Income statement for S for year ending 31 December 2023 in BP Sales revenues BP BP 8,000,000 Beginning inventory 600,000 Purchases 5,700,000 Ending inventory -cost (750,000) Cost of goods sold (5,550,000) Gross profit 2,450,000 Depreciation expense (400,000) Administrative expense (220,000) Selling expense (380,000) Tax expense (180,000) Net income 1,270,000 beginning RE 1,800,000 Net income 1,270,000 Dividends (320,000) 2,750,000 Ending retained earnings Additional information: 1- Assume sales, purchases, administrative and selling expenses, and tax expense occur evenly during the year. 2- PPE was purchased on 1 January 2022 except for a building that was purchased on 1 Jan 2020 with a value of 1,200,000. 3- 25% of the depreciation expense related to building that was purchased on 1" Jan 2020. 4- Beginning Inventory was purchased evenly in the fourth quarter of 2022 5- Ending inventory was purchased evenly in the fourth quarter of 2023 6- Dividends were declared and paid at 31 December 2023 7- Unearned revenues were received on 20 December 2023 8- Ending merchandise inventory is stated at cost using LCNRV. NRV is 650,000 9- The translated Ending retained earnings carried over from the year 2022 is equivalent to 730,000 KD. 10- The movement in the exchange rate are as follows 1 January 2010 1 January 2020 1 KD = 3 1 KD- 2.4 Weighted Average for fourth quarter in 2022 1 KD = 2.75 Weighted Average for the 2023 year 1 KD = 2.6 Weighted Average for fourth quarter in 2023 1 KD = 2.5 20 December 2023 1 KD = 2.65 31 December 2023 1 KD = 2.9 Solve the questions based on the following scenario: a. Assume that the functional currency of XYZ Ltd is the Kuwaiti Dinar (KD). b. Assume that the functional currency of XYZ Ltd is the BP. ABC Inc. is a Kuwait based Company established a wholly owned overseas subsidiary XYZ Ltd on 1 January 2010 in UK (share capital was issued on this date). The summary financial statements of XYZ at 31 December 2023 are as follows these statements are presented in British Pound. Assets Cash A/R - Net Inventory Investment at FV Plant property and equipment- Accumulated depreciation) 31 December 2023 BP 1,500,000 2,000,000 750,000 400,000 3,400,000 cost (1,200,000) Total Assets 6,850,000 Liabilities Accounts payable 400,000 Bonds Payable 1,500,000 Unearned revenue 200,000 Equity Share capital 1,000,000 Share premium 1,000,000 Retained Earnings 2,750,000 Total liabilities and equity 6,850,000 Income statement for S for year ending 31 December 2023 in BP Sales revenues BP BP 8,000,000 Beginning inventory 600,000 Purchases 5,700,000 Ending inventory -cost (750,000) Cost of goods sold (5,550,000) Gross profit 2,450,000 Depreciation expense (400,000) Administrative expense (220,000) Selling expense (380,000) Tax expense (180,000) Net income 1,270,000 beginning RE 1,800,000 Net income 1,270,000 Dividends (320,000) 2,750,000 Ending retained earnings Additional information: 1- Assume sales, purchases, administrative and selling expenses, and tax expense occur evenly during the year. 2- PPE was purchased on 1 January 2022 except for a building that was purchased on 1 Jan 2020 with a value of 1,200,000. 3- 25% of the depreciation expense related to building that was purchased on 1" Jan 2020. 4- Beginning Inventory was purchased evenly in the fourth quarter of 2022 5- Ending inventory was purchased evenly in the fourth quarter of 2023 6- Dividends were declared and paid at 31 December 2023 7- Unearned revenues were received on 20 December 2023 8- Ending merchandise inventory is stated at cost using LCNRV. NRV is 650,000 9- The translated Ending retained earnings carried over from the year 2022 is equivalent to 730,000 KD. 10- The movement in the exchange rate are as follows 1 January 2010 1 January 2020 1 KD = 3 1 KD- 2.4 Weighted Average for fourth quarter in 2022 1 KD = 2.75 Weighted Average for the 2023 year 1 KD = 2.6 Weighted Average for fourth quarter in 2023 1 KD = 2.5 20 December 2023 1 KD = 2.65 31 December 2023 1 KD = 2.9 Solve the questions based on the following scenario: a. Assume that the functional currency of XYZ Ltd is the Kuwaiti Dinar (KD). b. Assume that the functional currency of XYZ Ltd is the BP.
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Related Book For
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville
Posted Date:
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