On January 1, 2021, Alpine Systems, a U.S.-based company, acquired a 100 percent interest in Grant Management
Question:
On January 1, 2021, Alpine Systems, a U.S.-based company, acquired a 100 percent interest in Grant Management Consultants, located in Zurich, Switzerland. All fixed assets were on the books when the subsidiary was acquired on January 1, 2021. Retained earnings balance of the subsidiary in U.S. dollars was $8,000 on January 1, 2021.
Exchange rates are:
Dollars per Swiss Franc | Swiss Francs per Dollar | ||
January 1, 2021 | $0.8000 | SF 1.2500 | |
December 31, 2021 | $0.8300 | SF 1.2048 | |
Average for 2021 | $0.8250 | SF 1.2121 | |
Dividend declaration and payment date | $0.8200 | SF 1.2195 |
Answer question 1 through 8 for Alpine Systems, a U.S.-based company. Information and worksheets for Alpine Systems are on pages 5 and 6.
1. What is the sales revenue in U.S. dollars when the functional currency is the Swiss Franc?
A. $125,000.
B. $83,000.
C. $80,000.
D. $82,500.
2. What is depreciation expense in U.S. dollars when the functional currency is the U.S. dollar?
A. $4,125.
B. $4,000.
C. $6,250.
D. $6,061.
3. What is depreciation expense in U.S. dollars when the functional currency is the Swiss Franc?
A. $4,125.
B. $4,000.
C. $6,250.
D. $6,061.
4. What is net income in U.S. dollars when the functional currency is the Swiss Franc?
A. $58,100.
B. $57,750.
C. $84,847.
D. $56,000.
5. What are total assets in U.S. dollars when the functional currency is the Swiss Franc?
A. $141,816.
B. $96,525.
C. $97,110.
D. $94,950.
6. What are total assets in U.S. dollars when the functional currency is the U.S. dollar?
A. $94,950.
B. $97,110.
C. $93,600.
D. $96,525.
7. What is the balance of the cumulative translation adjustment at December 31 when the functional currency is the Swiss Franc?
A. A credit of $920 (positive).
B. A debit of $920 (negative).
C. A credit of $585 (positive).
D. A debit of $585(negative).
8. What is the remeasurement gain or loss when the U.S. dollar is the functional currency?
A. Remeasurement gain $1,365.
B. Remeasurement loss $1,365.
C. Remeasurement loss $1,240.
D. Remeasurement gain $335.
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik