Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Question
Chapter 11, Problem 1.4E
To determine
Cumulative translation adjustment:
A Balance-sheet entry required of companies with foreign currency-based assets to provide greater transparency in their reporting. Assets acquired in a foreign currency are required to be reported at current exchange rates so that it reflects actual gain or losses.
: Computation of Net effect of translation on parent’s other comprehensive income.
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Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency:
Sales
K
210,000
Inventory (bought on 3/1/20)
105,000
Equipment (bought on 1/1/19)
62,000
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14,000
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Notes receivable (to be collected in 2023)
37,000
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18,600
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5,200
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The following U.S.$ per kuna exchange rates are applicable:
January 1, 2019
$0.20
Average for 2019
0.21
January 1, 2020
0.25
March 1, 2020
0.26
October 1, 2020
0.28
December 31, 2020
0.29
Average for 2020
0.27
Lancer is preparing account balances to produce consolidated financial statements.
Assuming that the kuna is the functional currency, what exchange rate would be used to report each of these accounts in…
The comparative statements of Dubai Company are presented below.
All sales were on account. The allowance for doubtful accounts was $3,200 on December 31, 2017, and $3,000 on December 31, 2020.
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Instructions:
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Current ratio
Sales to total assets ratio
Return on total assets ratio
Return on shareholders’ equity ratio
Gross profit ratio
Net profit ratio
Debt to equity ratio
Earnings per share
Price/earnings ratio
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The liquidity of each corporation.
Profitability.
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The stock market’s perceptions of these companies.
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