A 100 percent–owned foreign subsidiary’s trial balance consists of the accounts listed as follows. Which exchange...
A 100 percent–owned foreign subsidiary’s trial balance consists of the accounts listed as follows. Which exchange rate—current, historical, or average—would be used to translate these accounts to parent currency assuming that the foreign currency is the functional currency? Which rates would be used if the parent currency were the functional currency?
|
Trial Balance Accounts |
|
|
Cash |
Common stock |
|
Marketable securities (cost) |
Premium on common stock |
|
Accounts receivable |
Retained earnings |
|
Inventory (market) |
Sales |
|
Equipment |
Purchases |
|
Accumulated depreciation |
Cost of sales |
|
Prepaid expenses |
General and administrative expenses |
|
Goodwill |
Selling expenses |
|
Accounts payable |
Depreciation |
|
Due to parent (denominated in dollars) |
Amortization of goodwill |
|
Bonds payable |
Income tax expense |
|
Income taxes payable |
Intercompany interest expense |
|
Deferred income taxes |
Homework Answers
| foreign currency is the functional currency | parent currency were the functional currency | ||
| Cash | Current rate | Current rate | |
| Marketable securities (cost) |
|
Current rate | |
| Accounts receivable | Current rate | Current rate | |
| Inventory (market) | Current rate | Current rate | |
| Equipment | Current rate | Historical rate | |
| Accumulated depreciation | Current rate | Historical rate | |
| Prepaid expenses | Current rate | Historical rate | |
| Goodwill | Current rate | Historical rate | |
| Accounts payable | Current rate | Current rate | |
| Due to parent (denominated in dollars) | Current rate | Current rate | |
| Bonds payable | Current rate | Current rate | |
| Income taxes payable | Current rate | Current rate | |
| Deferred income taxes | Current rate | Current rate | |
| Common stock | Historical rate | Historical rate | |
| Premium on common stock | Historical rate | Historical rate | |
| Retained earnings | Average rate | Average Rate | |
| Sales | Average rate | Average Rate | |
| Purchases | Average rate | Average Rate | |
| Cost of sales | Average rate | Average Rate | |
| General and administrative expenses | Average rate | Average Rate | |
| Selling expenses | Average rate | Average Rate | |
| Depreciation | Average rate | Average Rate | |
| Amortization of goodwill | Average rate | Average Rate | |
| Income tax expense | Average rate | Average Rate | |
| Intercompany interest expense | Average rate | Average Rate |
Add Answer to:
A 100 percent–owned foreign subsidiary’s trial balance consists
of the accounts listed as follows. Which exchange...
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