16 points uiven below are comparative foreign currency balance sheets at Decembe

Question

16 points uiven below are comparative foreign currency balance sheets at December 31, 2015 and 2016, and a statement of income for the year ended December 31, 2016, for BN Corporation, a wholly-owned foreign subsidiary of a U.S. company. The statements conform with U.S. generally accepted accounting principles before translation to U.S. dollars. Capital stock was issued and fixed assets acquired when the exchange rate was FC1 -S.17. Inventories at January 1, 2016, were acquired during the fourth quarter of 2015. Purchases (FC 6,250), sales, other expenses, and dividends (FC 690) occurred evenly during 2016. Retained earnings in U.S. dollars at December 31, 2015, under the temporal method were $316. Exchange rates were as follows: January 1,2016 December 31, 2016 Average during 2016 A verage during fourth quarter, 2015 Average during fourth quarter, 2016 FC1-$.23 FCI-S.I8 FCI-S.22 FC S.23 FC1-S.19

Explanation / Answer

A Current Rate Method Translated Income Statement of BN Corporation Year Ended 12/31/2016 FC FC $ Sales    10,000.00     2,200.00 Expenses Cost of Sales      5,950.00 Depreciation (Straight Line)      1,000.00 Other      1,493.00      8,443.00     1,857.46 Operating Income      1,557.00         342.54 Income Taxes          467.00         102.74 Net Income      1,090.00         239.80 Dividend          690.00         151.80 Net Income after Dividend          400.00           88.00 Translated Balance Sheet of BN Corporation 12/31/2016 FC $ Cash          500.00            90.00 Accounts receivable(net)      1,000.00          180.00 Inventories(Lower of FIFO cost or market)      1,500.00          270.00 Fixed assets (net)      8,000.00      1,440.00 Total assets    11,000.00      1,980.00 Accounts Payable      2,400.00          432.00 Long-term debt      3,000.00          540.00 Capital Stock      2,000.00          340.00 Retained Earnings      3,600.00          404.00 Currency Translation Adjustments(PLUG)          264.00 Total liabilities and owner's equity    11,000.00      1,980.00 B) Temporal Method Translated Income Statement of BN Corporation Year Ended 12/31/2016 FC FC $ Sales    10,000.00     2,200.00 Expenses Cost of Sales      5,950.00     1,318.00 Depreciation (Straight Line)      1,000.00         170.00 Other      1,493.00      8,443.00         328.46 Operating Income      1,557.00         383.54 Income Taxes          467.00           79.39 Net Income      1,090.00         304.15 Dividend          690.00         151.80 Remeasurement Gain(PLUG)       (261.30) Net Income after Dividend(Note 2)          400.00         194.65 Translated Balance Sheet of BN Corporation 12/31/2016 FC $ Cash          500.00            90.00 Accounts receivable(net)      1,000.00          180.00 Inventories(Lower of FIFO cost or market)      1,500.00          345.00 Fixed assets (net)      8,000.00      1,360.00 Total assets    11,000.00      1,975.00 Accounts Payable      2,400.00          432.00 Long-term debt      3,000.00          540.00 Capital Stock      2,000.00          340.00 Retained Earnings(PLUG)      3,600.00          663.00 Total liabilities and owner's equity    11,000.00      1,975.00 Note 1 Calculation of Cost of Sales under Temporal Method Opening Inventory      1,200.00          228.00 Plus: Purchases      6,250.00      1,375.00 Less: Closing Inventory    (1,500.00)       (285.00) Cost of Sales      5,950.00      1,318.00 Note 2 Calculation of Closing Retained Earnings under Temporal Method Beginning Retained Earnings 316 Net Income(PLUG)          152.35 Dividend          194.65 Closing Retained Earnings      3,600.00          663.00

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.