Pla purchased a 40 percent interest in Sor, a foreign company, on January 1, 2011, for $342,000,
Question:
Pla purchased a 40 percent interest in Sor, a foreign company, on January 1, 2011, for $342,000, when Sor's stockholders' equity consisted of 3,000,000 LCU capital stock and 1,000,000 LCU retained earnings. Sor's functional currency is its local currency unit. The exchange rate at this time was $0.15 per LCU. Any excess allocated to patents is to be amortized over 10 years.
A summary of changes in the stockholders' equity of Sor during 2011 (including relevant exchange rates) is as follows:
REQUIRED:Determine the following:1. Excess patent from Pla's Investment in Sor on January 1, 20112. Excess patent amortization for 20113. Unamortized excess patent at December 31, 20114. Equity adjustment from patents for 20115. Income from Sor for 20116. Investment in Sor balance at December 31,2011
Exchange RateThe 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 Accounting
ISBN: 9780132568968
11th Edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith