Question
In: Accounting
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million...
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and fair values of the subsidiary’s assets and liabilities were:
| Cash | CHF | 804,000 | |
| Inventory | 1,304,000 | ||
| Property, plant & equipment | 4,004,000 | ||
| Notes payable | (2,108,000 | ) | |
Stephanie prepares consolidated financial statements on December 31, 2017. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation.
-
Determine the translation adjustment to be reported on Stephanie’s December 31, 2017, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary’s functional currency. What is the economic relevance of this translation adjustment?
-
Determine the remeasurement gain or loss to be reported in Stephanie’s 2017 consolidated net income, assuming that the U.S. dollar is the functional currency. What is the economic relevance of this remeasurement gain or loss?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million...
On December 18, 2017, Stephanie Corporation acquired 100 percent
of a Swiss company for 4.0 million Swiss francs (CHF), which is
indicative of book and fair value. At the acquisition date, the
exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and
fair values of the subsidiary’s assets and liabilities were: Cash
CHF 805,000 Inventory 1,305,000 Property, plant & equipment
4,005,000 Notes payable (2,110,000 ) Stephanie prepares
consolidated financial statements on December 31, 2017. By that...
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million...
On December 18, 2017, Stephanie Corporation acquired 100 percent
of a Swiss company for 4.0 million Swiss francs (CHF), which is
indicative of book and fair value. At the acquisition date, the
exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and
fair values of the subsidiary’s assets and liabilities were:
Cash
CHF
824,000
Inventory
1,324,000
Property, plant & equipment
4,000,000
Notes payable
(2,148,000
)
Stephanie prepares consolidated financial statements on December
31, 2017. By that...
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million...
On December 18, 2017, Stephanie Corporation acquired 100 percent
of a Swiss company for 4.0 million Swiss francs (CHF), which is
indicative of book and fair value. At the acquisition date, the
exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and
fair values of the subsidiary’s assets and liabilities were:
Cash
CHF
811,000
Inventory
1,311,000
Property, plant &
equipment
4,011,000
Notes payable
(2,122,000
)
Stephanie prepares consolidated financial statements on December
31, 2017. By that...
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million...
On December 18, 2017, Stephanie Corporation acquired 100 percent
of a Swiss company for 4.0 million Swiss francs (CHF), which is
indicative of book and fair value. At the acquisition date, the
exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and
fair values of the subsidiary’s assets and liabilities were: Cash
CHF 823,000 Inventory 1,323,000 Property, plant & equipment
4,023,000 Notes payable (2,146,000 ) Stephanie prepares
consolidated financial statements on December 31, 2017. By that...
Q#9 On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0...
Q#9
On December 18, 2017, Stephanie Corporation acquired 100 percent
of a Swiss company for 4.0 million Swiss francs (CHF), which is
indicative of book and fair value. At the acquisition date, the
exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and
fair values of the subsidiary’s assets and liabilities were:
Cash
CHF
817,000
Inventory
1,317,000
Property, plant
& equipment
4,017,000
Notes
payable
(2,134,000
)
Stephanie prepares consolidated financial statements on December
31, 2017. By...
On December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.023 million...
On December 18, 2020, Stephanie Corporation acquired 100 percent
of a Swiss company for 4.023 million Swiss francs (CHF), which is
indicative of book and fair value. At the acquisition date, the
exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and
fair values of the subsidiary’s assets and liabilities were as
follows:
Cash
CHF
823,000
Inventory
1,323,000
Property, plant, and equipment
4,023,000
Notes payable
(2,146,000
)
Stephanie prepares consolidated financial statements on December
31, 2020....
On December 31, 2009, Add-On Company acquired 100 percent of the common shares of Venus Corporation...
On December 31, 2009, Add-On Company acquired 100 percent of the
common shares of Venus Corporation for $ 300,000. Information about
the Venus balance just before the acquisition is given here:
Cash and Accounts Receivable...............$ 35,000
Inventory
.................................................$75,000
Land
........................................................$100,000,
Buildings and Equipment (net) ................$220,000
Total Assets .........................................$
430,000
Accounts Payable ....................................$ 65,000
Bonds Payable ................................... $150,000
Common Stock
.........................................$100,000
Retained earnings ...................................$115,000
Total Liabilities and Stockholders'Equity$
430,000
At the date of the business combination, the net assets and
liabilities...
On January 1, 2017, Prestige Corporation acquired 100 percent of the voting stock of Stylene Corporation...
On January 1, 2017, Prestige Corporation acquired 100 percent of
the voting stock of Stylene Corporation in exchange for $2,227,500
in cash and securities. On the acquisition date, Stylene had the
following balance sheet:
Cash
$
31,200
Accounts payable
$
1,246,700
Accounts receivable
143,500
Inventory
182,000
Equipment (net)
1,560,000
Common stock
800,000
Trademarks
964,000
Retained earnings
834,000
$
2,880,700
$
2,880,700
At the acquisition date, the book values of Stylene’s assets and
liabilities were generally equivalent to their fair...
Paco Company acquired 100 percent of the stock of Garland Corp. on December 31, 20X8. The...
Paco Company acquired 100 percent of the stock of Garland Corp.
on December 31, 20X8. The stockholder's equity section of Garland's
balance sheet at that date is as follows:
Common Stock
$300,000
Additional Paid-In Capital
500,000
Retained Earnings
400,000
Total
$1,200,000
Paco financed the acquisition by using $820,000 cash and giving
a note payable for $400,000. Book value approximated fair value for
all of Garland's assets and liabilities except for buildings which
had a fair value $60,000 more than...
Patrio Corporation acquired 100 percent of Aloe Corporation’s common stock on December 31, 2019, for $280,000....
Patrio Corporation acquired 100 percent of Aloe Corporation’s
common stock on December 31, 2019, for $280,000. Data from the
balance sheets of the two companies included the following amounts
as of the date of acquisition:
Item
Patrio
Aloe
Corporation
Corporation
Cash
$55,000
$48,000
Accounts Receivable
83,000
110,000
Inventory
310,000
167,000
Property & Plant (net)
200,000
105,000
Investment in Aloe Corporation Stock
280,000
Total Assets
$928,000
$430,000
Accounts Payable
$109,000
$43,000
Notes Payable
235,000
90,000
Common Stock
300,000
102,000
Retained Earnings...
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