Stiff Sails Corporation, a U.S. company, operates a 100%-owned British subsidiary, SeaBeWe Corporation. The U.S. dollar is the functional currency of the subsidiary. Financial statements for the subsidiary for the fiscal year-end December 31, 2017, are as follows: Other Information:
1. Equipment costing 340,000 pounds was acquired July 1, 2015, and 38,000 was acquired June 30, 2017. Depreciation for the period was as follows: 2. The beginning inventory was acquired when the exchange rate was $1.77. The inventory is valued on a FIFO basis. Purchases and the ending inventory were acquired evenly throughout the period.
3. Dividends were paid by the subsidiary on June 30 amounting to 156,000 pounds.
4. Sales were made and all expenses were incurred uniformly throughout the year.
5. Exchange rates for the pound on various dates were: Required:
A. Prepare a schedule to determine the translation gain or loss for 2016, assuming the net monetary liability position on January 1, 2017, was 180,000 pounds.
B. Compute the dollar amount that each of the following would be reported at in the 2017 financial statements:
1. Cost of Goods Sold.
2. Depreciation Expense.
3. Equipment.

Question

Stiff Sails Corporation, a U.S. company, operates a 100%-owned British subsidiary, SeaBeWe Corporation. The U.S. dollar is the functional currency of the subsidiary. Financial statements for the subsidiary for the fiscal year-end December 31, 2017, are as follows:  Other Information:
1. Equipment costing 340,000 pounds was acquired July 1, 2015, and 38,000 was acquired June 30, 2017. Depreciation for the period was as follows:  2. The beginning inventory was acquired when the exchange rate was $1.77. The inventory is valued on a FIFO basis. Purchases and the ending inventory were acquired evenly throughout the period.
3. Dividends were paid by the subsidiary on June 30 amounting to 156,000 pounds.
4. Sales were made and all expenses were incurred uniformly throughout the year.
5. Exchange rates for the pound on various dates were:  Required:
A. Prepare a schedule to determine the translation gain or loss for 2016, assuming the net monetary liability position on January 1, 2017, was 180,000 pounds.
B. Compute the dollar amount that each of the following would be reported at in the 2017 financial statements:
1. Cost of Goods Sold.
2. Depreciation Expense.
3. Equipment.

Quizplus · Accepted Answer

The Answer of Stiff Sails Corporation, a U.S. company, operates a 100%-owned British subsidiary, SeaBeWe Corporation. The U.S. dollar is the functional currency of the subsidiary. Financial statements for the subsidiary for the fiscal year-end December 31, 2017, are as follows:  Other Information:
1. Equipment costing 340,000 pounds was acquired July 1, 2015, and 38,000 was acquired June 30, 2017. Depreciation for the period was as follows:  2. The beginning inventory was acquired when the exchange rate was $1.77. The inventory is valued on a FIFO basis. Purchases and the ending inventory were acquired evenly throughout the period.
3. Dividends were paid by the subsidiary on June 30 amounting to 156,000 pounds.
4. Sales were made and all expenses were incurred uniformly throughout the year.
5. Exchange rates for the pound on various dates were:  Required:
A. Prepare a schedule to determine the translation gain or loss for 2016, assuming the net monetary liability position on January 1, 2017, was 180,000 pounds.
B. Compute the dollar amount that each of the following would be reported at in the 2017 financial statements:
1. Cost of Goods Sold.
2. Depreciation Expense.
3. Equipment.