Problem FIVE (6 points): A U.S. company acquired a French subsidiary on January 1, 2014. The...
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Problem FIVE (6 points): A U.S. company acquired a French subsidiary on January 1, 2014. The subsidiary's trial Oalances for January 1 and December 31, 2014 are presented below, in euros. Cash, receivables Plant & equipment, net Liabilities Stockholder's Equity, January 1 Dividends Net Income Total January 1, 2014 balances Dr (Cr) December 31, 2014 balances Dr (Cr) € 35,000 402,000 € 25,000 430,000 (172,000) (165,000) (265,000) (265,000) 10,000 (35,000) -0- -0- New plant & equipment of €80,000 was acquired in 2014. Operating expenses include €50,000 of depreciation on plant & equipment, of which €6,000 is related to plant & equipment purchased in 2014. Exchange rates (SU.S./€) are as follows: January 1, 2014 $1.44 Plant & equipment acquired Dividends declared 1.41 Average for 2014 1.30 1.26 December 31, 2014. 1.25 Requirement A: Assume that there was a remeasurement gain of $12,000. Please indicate where this amount is reported in the financial statements (in one complete sentence). [You may specify the account, the financial statement or the subsection of a financial statement (as appropriate in the situation). However, "net assets" and/or "equity section" are not acceptable answers.] Requirement B: Assume that there was a translation loss of $12,000. Please indicate where this amount is reported in the financial statements (in one complete sentence). [You may specify the account, the financial statement or the subsection of a financial statement (as appropriate in the situation). However, "net assets" and/or "equity section" are not acceptable answers.] Problem SIX (5 points): Please draw a diagram (IN GOOD FORM) depicting the two-step foreign currency financial statement conversion process (similar to the diagram in the text). This would include the appropriate labels and descriptions/underlying logic (etc.) in the appropriate locations on the diagram. Problem FIVE (6 points): A U.S. company acquired a French subsidiary on January 1, 2014. The subsidiary's trial Oalances for January 1 and December 31, 2014 are presented below, in euros. Cash, receivables Plant & equipment, net Liabilities Stockholder's Equity, January 1 Dividends Net Income Total January 1, 2014 balances Dr (Cr) December 31, 2014 balances Dr (Cr) € 35,000 402,000 € 25,000 430,000 (172,000) (165,000) (265,000) (265,000) 10,000 (35,000) -0- -0- New plant & equipment of €80,000 was acquired in 2014. Operating expenses include €50,000 of depreciation on plant & equipment, of which €6,000 is related to plant & equipment purchased in 2014. Exchange rates (SU.S./€) are as follows: January 1, 2014 $1.44 Plant & equipment acquired Dividends declared 1.41 Average for 2014 1.30 1.26 December 31, 2014. 1.25 Requirement A: Assume that there was a remeasurement gain of $12,000. Please indicate where this amount is reported in the financial statements (in one complete sentence). [You may specify the account, the financial statement or the subsection of a financial statement (as appropriate in the situation). However, "net assets" and/or "equity section" are not acceptable answers.] Requirement B: Assume that there was a translation loss of $12,000. Please indicate where this amount is reported in the financial statements (in one complete sentence). [You may specify the account, the financial statement or the subsection of a financial statement (as appropriate in the situation). However, "net assets" and/or "equity section" are not acceptable answers.] Problem SIX (5 points): Please draw a diagram (IN GOOD FORM) depicting the two-step foreign currency financial statement conversion process (similar to the diagram in the text). This would include the appropriate labels and descriptions/underlying logic (etc.) in the appropriate locations on the diagram.
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Requirement A In the scenario where there was a remeasurement gain of 12000 this amount would be rep... View the full answer
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