Question
In: Accounting
On January 1, 2016, Safetyway Group, a U.S. company, formed a Swiss subsidiary, TEurope AG. The...
On January 1, 2016, Safetyway Group, a U.S. company, formed a Swiss subsidiary, TEurope AG. The subsidiary issued all of its currently outstanding common stock on that date. Selected accounts from its balance sheets on December 31, 2016 and 2017, all of which are shown in Swiss francs (CHF), are as follows:
December 31
| (in millions) | 2017 | 2016 |
|---|---|---|
| Accounts receivable, net | CHF 40,000 | CHF 35,000 |
| Inventories, at cost | 80,000 | 75,000 |
| Property, plant and equipment, net of accumulated depreciation | ||
| of CHF31,000 at December 31, 2017 and CHF14,000 at | ||
| December 31, 2016 | 163,000 | 150,000 |
| Long-term debt | 100,000 | 120,000 |
| Common stock 10,000 shares authorized, issued and outstanding | ||
| 5,000 shares at December 31, 2017 and December 31, 2016 | 50,000 | 50,000 |
Additional Information:
1. Exchange rates are as follows:
| $/CHF | |
| January 1, 2016 | $0.96 |
| June, 2016 | 0.98 |
| December 31, 2016 | 1.04 |
| Average rate for 2016 | 0.99 |
| June, 2017 | 1.10 |
| July 4, 2017 | 1.12 |
| December 31, 2017 | 1.13 |
| Average rate for 2017 | 1.09 |
2. An analysis of inventories, for which the FIFO inventory method is used, is as follows:
| 2017 | 2018 | |
|---|---|---|
| Inventory at beginning of year | CHF 75,000 | ----- |
| Purchases (June 2017 and June 2016) | 335,000 | CHF 375,000 |
| Goods available for sale | 410,000 | 375,000 |
| Inventory at end of year | (80,000) | (75,000) |
| Costs of goods sold | CHF 330,000 | CHF 300,000 |
3. On January 1, 2016, TEurope purchased land for CHF24,000 and plant and equipment for CHF140,000. On July 4, 2017, additional equipment was purchased for CHF30,000. Plant and equipment is depreciated on a straight-line basis over a ten-year period with no salvage value. A full year’s depreciation is taken in the year of purchase.
Required
a. Prepare a schedule remeasuring the selected accounts above into U.S. dollars (the functional currency) at December 31, 2017, and December 31, 2016, respectively. Show supporting computations in good form.
b. Prepare a schedule translating the selected accounts above into U.S. dollars at December 31, 2017, and December 31, 2016, assuming the Swiss franc is the functional currency.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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