Question
In: Accounting
Board Company has a foreign subsidiary that began operations at the start of 2017 with assets...
Board Company has a foreign subsidiary that began operations at the start of 2017 with assets of 152,000 kites (the local currency unit) and liabilities of 94,000. During this initial year of operation, the subsidiary reported a profit of 46,000 kites. It distributed two dividends, each for 7,000 kites with one dividend declared on March 1 and the other on October 1. Applicable exchange rates for 1 kite follow:
| January 1, 2017 (start of business) | $0.78 |
| March 1, 2017 | 0.76 |
| Weighted average rate for 2017 | 0.75 |
| October 1, 2017 | 0.74 |
| December 31, 2017 | 0.73 |
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Assume that the kite is this subsidiary’s functional currency. What translation adjustment would Board report for the year 2017?
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Assume that on October 1, 2017, Board entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, Board agreed to sell 195,000 kites in three months at a forward exchange rate of $0.74/1 kite. Prepare the journal entries required by this forward contract.
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Compute the net translation adjustment for Board to report in accumulated other comprehensive income for the year 2017 under this second set of circumstances.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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distributed two dividends, each for 6,600 kites with one dividend
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Board Company has a foreign subsidiary that began operations at
the start of 2017 with assets of 148,000 kites (the local currency
unit) and liabilities of 86,000. During this initial year of
operation, the subsidiary reported a profit of 42,000 kites. It
distributed two dividends, each for 6,600 kites with one dividend
declared on March 1 and the other on October 1. Applicable exchange
rates for 1 kite follow:
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