Below You Will Find the Balance Sheet and Income Statement
Question 96
Question 96
Essay
Below you will find the balance sheet and income statement of a US Corp.'s foreign subsidiary at the end of its first year of operations. The following exchange rates were in effect during the period: Jan. 1, 2012 - $1 = 1FC Dec. 31, 2012 - $1.70 = 1FC The average exchange rate during the period was $1.40=1FC. The common stock was issued on January 1, 2012. Assuming that the foreign currency is the functional currency translate the financial statements into U.S. dollars. Balance Sheet As of December 31 , (Amounts in Foreign Currency) Assets: Cash and cash equivalents Accounts Receivable Inventory Current Assets Equipment Less: Accumulated depreciation Equipment-Net Land Total assets Liabilities Accounts Payable Accrued Salaries Payable Rent Expense Payable Income Tax Payable Current Liabilities Long-term note payable Total Liabilities Stockholders’ Equity: Common stock Retained earnings Total liabilities and stockholders’ equity201218,00033,00024,00075,00042,225(1.725)40,50034.500150,00048,00014,7587,5003,00073,25845,000118,25830,0001.742150,000 Income Statement For the year ended December 31,2012 (Amounts in foreign currency) Revenues Cost of goods sold Gross Profit Operating Expenses Depreciation expense Salary expense Insurance Expense Rent Expense Interest Expense Total Operating Expenses Income from Operations Income Tax Expense Net income Dividends paid to Common Shareholders 97,500(58,500)(1,725)(24,625)(1,700)(4,875)(2,520)74739,000(35,445)3,555(1,067)2,488
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