Determine the amount of translation adjustment, Financial Accounting

Alliance Corporation (an Australian company) invests 1,000,000 marks in a foreign subsidiary on January 1, Year 1. The subsidiary commences operations on that date, and generates net income of 200,000 marks during its first year of operations. No dividends are sent to the parent this year. A relevant exchange rate between Alliance’s reporting currency (A$) and the mark is as follows:

January 1, Year 1………….. A$0.15

Average, Year 1………………….0.17

December 31, 1997……………0.21


Determine the amount of translation adjustment that Alliance will report on its December 31, Year 1, balance sheet.

        Marks Rate A$
Net Assets, 1/1/Y1      1,000,000           0.15    150,000
Increase in Net assets:        
    Net Income, Year 1        200,000           0.17      34,000
Net Assets, 31/12/Y1    1,200,000      184,000
Net Assets, 31/12/Y1 at        
the current exchange rate    1,200,000           0.21    252,000
Translation adjustment           -68,000


Posted Date: 8/9/2012 8:18:44 AM | Location : United States

Related Discussions:- Determine the amount of translation adjustment, Assignment Help, Ask Question on Determine the amount of translation adjustment, Get Answer, Expert's Help, Determine the amount of translation adjustment Discussions

Write discussion on Determine the amount of translation adjustment
Your posts are moderated
Related Questions

Uncertainty A gift or disposition not expressive of any definite intention shall be void for uncertainty, i.e A gift under a will fails where there is uncertainty as to:

Financial Accounting An accounting technique that records, interprets, and reports the historical cost transaction of an organization. An organization records these transaction

What are the effects on current income and on future income, if a firm incorrectly capitalizes an expenditure that it should have expensed?   State your answer for both current inc

The difficulties associated with managing organisations with multiple objectives To the level that an organisation faces a range of stakeholders then they also face multiple ob

ACCOUNTS UNDER TRUSTEE (a) Authorised investments The investments which trustees are permitted to hold may be specifically stated in the will or deed constituting the se

Since 1968, Dracula Limited has traded in Doncaster, South Yorkshire as a manufacturer of fancy-dress and theatrical costumes. It produces a wide range of general theatrical costum