Pal acquired all the stock of Sta of Britain on January 1, 2011, for $163,800, when Sta
Question:
Pal acquired all the stock of Sta of Britain on January 1, 2011, for $163,800, when Sta had capital stock of £60,000 and retained earnings of £30,000. Sta’s assets and liabilities were fairly valued, except for equipment with a three-year life that was undervalued by £6,000. Any remaining excess is due to a patent with a useful life of 10 years.
Sta’s functional currency is the pound. Exchange rates for British pounds are as follows:
January 1, 2011 $1.66
Average for the year 2011 1.65
December 31, 2011 1.64
REQUIRED
1. Determine the unrealized translation gain or loss at December 31, 2011, related to the cost/book value differential assigned to equipment.
2. Determine the unrealized translation gain or loss at December 31, 2011, related to the patent.
Step by Step Answer:
Advanced Accounting
ISBN: 9780132568968
11th Edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith