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 139,000 kites (the local currency unit) and liabilities of 68,000. During this initial year of operation, the subsidiary reported a profit of 33,000 kites. It distributed two dividends, each for 5,700 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) $0.76 March 1, 2017 0.74 Weighted average rate for 2017 0.73 October 1, 2017 0.72 December 31, 2017 0.71 Assume that the kite is this subsidiary’s functional currency. What translation adjustment would Board report for the year 2017? 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 270,000 kites in three months at a forward exchange rate of $0.72/1 kite. Prepare the journal entries required by this forward contract. 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
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...
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 138,000 kites (the local currency
unit) and liabilities of 66,000. During this initial year of
operation, the subsidiary reported a profit of 32,000 kites. It
distributed two dividends, each for 5,600 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)
$0.75
March 1, 2017
0.73...
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 143,000 kites (the local currency
unit) and liabilities of 76,000. During this initial year of
operation, the subsidiary reported a profit of 37,000 kites. It
distributed two dividends, each for 6,100 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)
$0.80
March 1, 2017
0.78...
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 157,000 kites (the local currency
unit) and liabilities of 104,000. During this initial year of
operation, the subsidiary reported a profit of 51,000 kites. It
distributed two dividends, each for 7,500 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)
$0.83
March 1, 2017
0.81...
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 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:
January 1, 2017 (start of
business)
$0.85
March 1, 2017
0.83...
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 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:
January 1, 2017 (start of
business)
$0.85
March 1, 2017
0.83...
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by...
Sullivan's Island Company began operating a subsidiary in a
foreign country on January 1, 2017, by investing capital in the
amount of 104,000 pounds. The subsidiary immediately borrowed
250,000 pounds on a five-year note with 8 percent interest payable
annually beginning on January 1, 2018. The subsidiary then
purchased for 354,000 pounds a building that had a 10-year expected
life and no salvage value and is to be depreciated using the
straight-line method. Also on January 1, 2017, the subsidiary...
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by...
Sullivan's Island Company began operating a subsidiary in a
foreign country on January 1, 2017, by investing capital in the
amount of 100,000 pounds. The subsidiary immediately borrowed
240,000 pounds on a five-year note with 6 percent interest payable
annually beginning on January 1, 2018. The subsidiary then
purchased for 340,000 pounds a building that had a 10-year expected
life and no salvage value and is to be depreciated using the
straight-line method. Also on January 1, 2017, the subsidiary...
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by...
Sullivan's Island Company began operating a subsidiary in a
foreign country on January 1, 2017, by investing capital in the
amount of 94,000 pounds. The subsidiary immediately borrowed
225,000 pounds on a five-year note with 9 percent interest payable
annually beginning on January 1, 2018. The subsidiary then
purchased for 319,000 pounds a building that had a 10-year expected
life and no salvage value and is to be depreciated using the
straight-line method. Also on January 1, 2017, the subsidiary...
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by...
Sullivan's Island Company began operating a subsidiary in a
foreign country on January 1, 2017, by investing capital in the
amount of 63,000 pounds. The subsidiary immediately borrowed
160,000 pounds on a five-year note with 10 percent interest payable
annually beginning on January 1, 2018. The subsidiary then
purchased for 223,000 pounds a building that had a 10-year expected
life and no salvage value and is to be depreciated using the
straight-line method. Also on January 1, 2017, the subsidiary...
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