Question Five (10 marks) A Lebanese Company has a branch in Egypt. The branch's financial statements...

  

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Question Five (10 marks) A Lebanese Company has a branch in Egypt. The branch's financial statements in 31/12/2020 (Egyptian pound-LE) were as follows: Income statement Revenues Cost of goods sold Other expenses (including depreciation 30,000) Net income Cash Inventory (cost) Plant Assets Statement of Financial Position AP Long-term loan Capital Retained earnings 300,000 (150.000) (50,000) 100,000 150.000 50,000 300,000 500,000 30,000 Additional information: 1. The Branch acquired the plant assets in January 1, 2009 when the company was established. 2. On January 1, 2010, the company increased capital by LE 50,000 and purchased plant assets of LE 100,000. Plant assets have no salvage value and have the same useful life and the company uses the straight-line depreciation. 3. The branch declared and paid dividends of LE 75,000 at December 1, 2020. 170,000 100,000 200,000 500,000 4. Beginning inventory of January 1, 2020 was acquired during October-December 2019. 5. The ending inventory was acquired on December 1, 2020. 6. Cost of goods sold balance at December 31, 2020 of the branch in Lebanese lira was LL 207,000, Date January 1, 2009 January 1, 2010 October-December 2019 January 1, 2019 7. The January 1, 2020 retained earnings balance of the branch in Lebanese lira was LL 350,000. Rate 1.32 1.36 1.34 1.30 8. The functional currency is the Lebanese lira (LL). 9. The exchange rate for Egyptian pound against the Lebanese are: Date Average for 2020 December 1, 2020 December 31, 2020 Rate 1.50 1.62 1.65 Instructions: 1. Calculate the re-measurement gain (loss) or translation adjustments. (4 pts.) 2. Translate the branch's income statement and retained earnings statement only. (6 pts.) Answer Question Five (10 marks) A Lebanese Company has a branch in Egypt. The branch's financial statements in 31/12/2020 (Egyptian pound-LE) were as follows: Income statement Revenues Cost of goods sold Other expenses (including depreciation 30,000) Net income Cash Inventory (cost) Plant Assets Statement of Financial Position AP Long-term loan Capital Retained earnings 300,000 (150.000) (50,000) 100,000 150.000 50,000 300,000 500,000 30,000 Additional information: 1. The Branch acquired the plant assets in January 1, 2009 when the company was established. 2. On January 1, 2010, the company increased capital by LE 50,000 and purchased plant assets of LE 100,000. Plant assets have no salvage value and have the same useful life and the company uses the straight-line depreciation. 3. The branch declared and paid dividends of LE 75,000 at December 1, 2020. 170,000 100,000 200,000 500,000 4. Beginning inventory of January 1, 2020 was acquired during October-December 2019. 5. The ending inventory was acquired on December 1, 2020. 6. Cost of goods sold balance at December 31, 2020 of the branch in Lebanese lira was LL 207,000, Date January 1, 2009 January 1, 2010 October-December 2019 January 1, 2019 7. The January 1, 2020 retained earnings balance of the branch in Lebanese lira was LL 350,000. Rate 1.32 1.36 1.34 1.30 8. The functional currency is the Lebanese lira (LL). 9. The exchange rate for Egyptian pound against the Lebanese are: Date Average for 2020 December 1, 2020 December 31, 2020 Rate 1.50 1.62 1.65 Instructions: 1. Calculate the re-measurement gain (loss) or translation adjustments. (4 pts.) 2. Translate the branch's income statement and retained earnings statement only. (6 pts.) Answer