Reference no: EM131119160
Refer to Problem 7.25 for Stebbins Corporation for Year 1, its first year of operations. Exhibit 7.39 shows the amounts for the Canadian subsidiary for Year 2. The average exchange rate during Year 2 was C$1:US$.82, and the exchange rate on December 31, Year 2, was C$1:US$.84. The Canadian subsidiary declared and paid dividends on December 31, Year 2.
Required
a. Prepare a balance sheet, an income statement, and a retained earnings statement for the Canadian subsidiary for Year 2 in U.S. dollars, assuming that the Canadian dollar is the functional currency. Include a separate schedule showing the computation of the translation adjustment for Year 2 and the change in the translation adjustment account.
b. Repeat Part a assuming that the U.S. dollar is the functional currency. Include a separate schedule showing the computation of the translation gain or loss.
c. Why is the sign of the translation adjustment for Year 2 under the all-current translation method and the translation gain or loss under the monetary/nonmonetary translation method the same? Why do their amounts differ?
d. Assuming that the firm could justify either translation method, which method would management of Stebbins Corporation likely prefer for Year 2? Why?
Effect of the change on the balance sheet
: Manner of reporting the change under current generally accepted accounting principles including a discussion, where applicable, of how amounts are computed.
|
Explain the six components or sources of return
: Explain the six components or sources of return for which proper analysis of an investment’s return must include. Discuss the implications of the following statement: “It’s not how much you earn on an investment, it’s how much you keep” Why?
|
How you think biographer-historian or social scientist
: Take a recent significant event (within the past ten years) and explain how you think a biographer, historian, or social scientist would describe the causes and consequences of the event (for example: the emergence of the European Union, the Timothy ..
|
Correction of a mathematical error in inventory pricing
: A change in the method of accounting for leases for tax purposes to conform with the financial accounting method. As a result, both deferred and current taxes payable changed substantially.
|
Prepare a balance sheet and income statement
: Prepare a balance sheet, an income statement, and a retained earnings statement for the Canadian subsidiary for Year 2 in U.S. dollars, assuming that the Canadian dollar is the functional currency.
|
True of leadership styles across cultures
: Which of the following is true of leadership styles across cultures?
|
What would be the proper adjustment to the december
: What would be the proper adjustment to the December 31, 2009, retained earnings?
|
Prepare a balance sheet an income statement
: Prepare a balance sheet, an income statement, and a retained earnings statement for the Canadian subsidiary for Year 1 in U.S. dollars assuming that the Canadian dollar is the functional currency. Include a separate schedule showing the computation o..
|
Change from fair value to equity method on january
: On the books of Martin Company prepare all journal entries in 2009, 2010, and 2011 that relate to its investment in Renner Corp., reflecting the data above and a change from the fair value method to the equity method.
|