The following account balances are for the Agee Company as of January 1, 2011, and December 31, 2011. All figures are denominated in kroner (Kr).
| January 1, 2011 | December 31, 2011 |
Accounts payable | (18,000) | (24,000) |
Accounts receivable | 35,000 | 79,000 |
Accumulated depreciation—buildings | (20,000) | (25,000) |
Accumulated depreciation—equipment . . | –0– | (5,000) |
Bonds payable—due 2014 | (50,000) | (50,000) |
Buildings | 118,000 | 97,000 |
Cash | 35,000 | 8,000 |
Common stock | (70,000) | (80,000) |
Depreciation expense | –0– | 15,000 |
Dividends (10/1/11) | –0– | 32,000 |
Equipment | –0– | 30,000 |
Gain on sale of building | –0– | (6,000) |
Rent expense | –0– | 14,000 |
Retained earnings | (30,000) | (30,000) |
Salary expense | –0– | 20,000 |
Sales | –0– | (80,000) |
Utilities expense | –0– | 5,000 |
Additional Information
• Agee issued additional shares of common stock during the year on April 1, 2011. Common stock at January 1, 2011, was sold at the start of operations in 2004.
• It purchased buildings in 2005 and sold one building with a book value of Kr 16,000 on July 1 of the current year.
• Equipment was acquired on April 1, 2011.
Relevant exchange rates for 1 Kr were as follows:
2004 | $2.40 |
2005 | 2.20 |
January 1, 2011 | 2.50 |
April 1, 2011 | 2.60 |
July 1, 2011 | 2.80 |
October 1, 2011 | 2.90 |
December 31, 2011 | 3.00 |
Average for 2011 | 2.70 |
a. Assuming the U.S. dollar is the functional currency and retained earnings at January 1, 2011, was $52,600, what is the remeasurement gain or loss for 2011?
b. Assuming the foreign currency is the functional currency and retained earnings at January 1, 2011, was $62,319, what is the translation adjustment for 2011?
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