PROJECT CHAPTER $10$

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Sendelbach Corporation is a U$.$S$.-$based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto, Canada. Although this wholly$-$owned subsidiary operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos $($Ps$)$ and a general ledger in Canadian dollars $($C$\backslash$$$).$ As of December $31,2024,$ the subsidiary is preparing financial statements in anticipation of consolidation with the U$.$S$.$ parent corporation. Both ledgers for the subsidiary are as follows:

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$c$|\}\{$Main Operation$-$Canada$\}\backslash \backslash$

$\backslash$hline & Debit & Credit $\backslash \backslash$

$\backslash$hline Accounts payable & & C$\backslash$$$25,650\backslash \backslash$

$\backslash$hline Accumulated depreciation & & $35,000\backslash \backslash$

$\backslash$hline Buildings and equipment & C$\backslash$$ $175,000$ & $\backslash \backslash$

$\backslash$hline Cash & $34,000$ & $\backslash \backslash$

$\backslash$hline Common stock & & $58,000\backslash \backslash$

$\backslash$hline Cost of goods sold & $211,000$ & $\backslash \backslash$

$\backslash$hline Depreciation expense & $7,700$ & $\backslash \backslash$

$\backslash$hline Dividends, $4/1/24$ & $27,000$ & $\backslash \backslash$

$\backslash$hline Gain on sale of equipment, $6/1/24$ & & $5,800\backslash \backslash$

$\backslash$hline Inventory & $87,000$ & $\backslash \backslash$

$\backslash$hline Notes payable$-$due in $2027$ & & $77,000\backslash \backslash$

$\backslash$hline Receivables & $76,000$ & $\backslash \backslash$

$\backslash$hline Retained earnings, $1/1/24$ & & $143,590\backslash \backslash$

$\backslash$hline Salary expense & $31,000$ & $\backslash \backslash$

$\backslash$hline Sales & & $320,000\backslash \backslash$

$\backslash$hline Utility expense & $9,800$ & $\backslash \backslash$

$\backslash$hline Branch operation & $6,540$ & $\backslash \backslash$

$\backslash$hline Totals & C$\backslash$$ $665,040$ & C$\backslash$$ $665,040\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

$\backslash$begin$\{$tabular$\}\{$lrrr$\}$

& Branch Operation$-$Mexico & & $\backslash \backslash$

& Debit & Credit $\backslash \backslash$

$\backslash$hline Accounts payable & & Ps $55,800\backslash \backslash$

Accumulated depreciation & Ps $48,000$ & $\backslash \backslash$

Building and equipment & $63,000$ & $\backslash \backslash$

Cash & $2,800$ & $\backslash \backslash$

Depreciation expense & $31,000$ & $\backslash \backslash$

Inventory $($beginning$-$income statement$)$ & &

$\backslash$end$\{$tabular$\}$

Additional Information

$-$ The Canadian subsidiary's functional currency is the Canadian dollar, and Sendelbach's reporting currency is the U$.$S$.$ dollar. The Canadian and Mexican operations are not viewed as separate accounting entities.

$-$ The building and equipment used in the Mexican operation were acquired in $2014$ when the currency exchange rate was $\backslash (\backslash$mathrm$\{$C$\}\backslash$$ $0\mathrm{.}17=\backslash )$ Ps $1.$

$-$ Purchases of inventory were made evenly throughout the fiscal year.

$-$ Beginning inventory was acquired evenly throughout $2023$; ending inventory was acquired evenly throughout $2024.$

$-$ The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$\backslash$$$6,540$ on December $31,2024.$

$-$ Currency exchange rates for $1$ Ps applicable to the Mexican operation follow:

$-$ The December $31,2023,$ consolidated balance sheet reported a cumulative translation adjustment with a $\backslash (\backslash$$ $44,950\backslash )$ credit $($positive$)$ balance.

$-$ The December $31,2023,$ consolidated balance sheet reported a cumulative translation adjustment with a $\backslash (\backslash$$ $44,950\backslash )$ credit $($positive$)$ balance.

$-$ The subsidiary's common stock was issued in $2011$ when the exchange rate was $\backslash$$$0\mathrm{.}53=$ C$\backslash$$$1.$

$-$ The subsidiary's December $31,2023,$ retained earnings balance was C$\backslash$$$143,590,$ an amount that has been translated into US$\backslash$$$65,423.$

$-$ The applicable currency exchange rates for $\backslash (1\backslash$mathrm$\{$C$\}\backslash$$ $\backslash )$ for translation purposes are as follows:

Required:

a$.$ Remeasure the Mexican operation's account balances into Canadian dollars. $($Note: Back into the beginning net monetary asset or liability position.$)$

b$.$ Prepare financial statements $($income statement, statement of retained earnings, and balance sheet$)$ for the Canadian subsidiary in its functional currency, Canadian dollars.

c$.$ Translate the Canadian dollar functional currency financial statements into U$.$S$.$ dollars so that Sendelbach can prepare consolidated financial statements.

Complete this question by entering your answers in the tabs below.

b$.$ Prepare financial statements $($income statement, statement of retained earnings, and balance sheet$)$ for the Canadian subsidiary in its functional currency, Canadian dollars.

c$.$ Translate the Canadian dollar functional currency financial statements into U$.$S$.$ dollars so that Sendelbach can prepare consolidated financial statements.

Note: Round U$.$S$.$ Dollar values to $2$ decimal places. Amounts to be deducted and losses should be indicated with a minus PROJECT CHAPTER $10$

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Remeasure the Mexican operation's account balances into Canadian dollars. $($Note: Back into the beginning net monetary asset or liability position.$)$

Note: Input all amounts as positive values.

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multirow$[$t$]\{2\}\{*\}\{\}$ & $\backslash$multicolumn$\{2\}\{|$l$|\}\{$Canadian Dollars$\}\backslash \backslash$

$\backslash$hline & Debit & Credit $\backslash \backslash$

$\backslash$hline Accounts payable & & $15,066\backslash \backslash$

$\backslash$hline Accumulated depreciation & & $3,876\backslash \backslash$

$\backslash$hline Buildings and equipment & $8,160$ & $\backslash \backslash$

$\backslash$hline Cash & $17,010$ & $\backslash \backslash$

$\backslash$hline Depreciation expense & $476$ & $\backslash \backslash$

$\backslash$hline Inventory $($beginning$-$income statement$)$ & $6,820$ & $\backslash \backslash$

$\backslash$hline Inventory $($ending$-$income statement$)$ & & $8,320\backslash \backslash$

$\backslash$hline Inventory $($ending$-$balance sheet$)$ & $8,320$ & $\backslash \backslash$

$\backslash$hline Purchases & $16,900$ & $\backslash \backslash$

$\backslash$hline Receivables & $7,830$ & $\backslash \backslash$

$\backslash$hline Salary expense & $2,548$ & $\backslash \backslash$

$\backslash$hline Sales & & $34,320\backslash \backslash$

$\backslash$hline Main office & & $6,540\backslash \backslash$

$\backslash$hline Remeasurement loss & $58$ & $\backslash \backslash$

$\backslash$ PROJECT CHAPTER $10$

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b$.$ Prepare financial statements $($income statement, statement of retained earnings, and balance sheet$)$ for the Canadian subsidiary in its functional currency, Canadian dollars.

c$.$ Translate the Canadian dollar functional currency financial statements