Plane Corporation, a U.S. company, owns 100% of Shipp Corporation, a Libyan company. Shipp's equipment was acquired on the following dates (amounts are stated in Libyan dinars):
Jan. 01, 2014 Purchased equipment for 40,000 dinars
Jul. 01, 2014 Purchased equipment for 80,000 dinars
Jan. 01, 2015 Purchased equipment for 50,000 dinars
Jul. 01, 2015 Sold equipment purchased on Jan. 01, 2014 for 35,000 dinars
Exchange rates for the Libyan dinars on various dates are:
Shipp's equipment has an estimated 5-year life with no salvage value and is depreciated using the straight-line method, calculating depreciation expense on a monthly basis. Shipp's functional currency is the U.S. dollar, but the company uses the Libyan dinar as its reporting currency.
Required:
1. Determine the value of Shipp's equipment account on December 31, 2015 in U.S. dollars.
2. Determine Shipp's depreciation expense for 2015 in U.S. dollars.
3. Determine the gain or loss from the sale of equipment on July 1, 2015 in U.S. dollars.

Question

Plane Corporation, a U.S. company, owns 100% of Shipp Corporation, a Libyan company. Shipp's equipment was acquired on the following dates (amounts are stated in Libyan dinars):
Jan. 01, 2014 Purchased equipment for 40,000 dinars
Jul. 01, 2014 Purchased equipment for 80,000 dinars
Jan. 01, 2015 Purchased equipment for 50,000 dinars
Jul. 01, 2015 Sold equipment purchased on Jan. 01, 2014 for 35,000 dinars
Exchange rates for the Libyan dinars on various dates are:
  Shipp's equipment has an estimated 5-year life with no salvage value and is depreciated using the straight-line method, calculating depreciation expense on a monthly basis. Shipp's functional currency is the U.S. dollar, but the company uses the Libyan dinar as its reporting currency.
Required:
1. Determine the value of Shipp's equipment account on December 31, 2015 in U.S. dollars.
2. Determine Shipp's depreciation expense for 2015 in U.S. dollars.
3. Determine the gain or loss from the sale of equipment on July 1, 2015 in U.S. dollars.

Quizplus · Accepted Answer

The Answer of Plane Corporation, a U.S. company, owns 100% of Shipp Corporation, a Libyan company. Shipp's equipment was acquired on the following dates (amounts are stated in Libyan dinars):
Jan. 01, 2014 Purchased equipment for 40,000 dinars
Jul. 01, 2014 Purchased equipment for 80,000 dinars
Jan. 01, 2015 Purchased equipment for 50,000 dinars
Jul. 01, 2015 Sold equipment purchased on Jan. 01, 2014 for 35,000 dinars
Exchange rates for the Libyan dinars on various dates are:
  Shipp's equipment has an estimated 5-year life with no salvage value and is depreciated using the straight-line method, calculating depreciation expense on a monthly basis. Shipp's functional currency is the U.S. dollar, but the company uses the Libyan dinar as its reporting currency.
Required:
1. Determine the value of Shipp's equipment account on December 31, 2015 in U.S. dollars.
2. Determine Shipp's depreciation expense for 2015 in U.S. dollars.
3. Determine the gain or loss from the sale of equipment on July 1, 2015 in U.S. dollars.