[go: up one dir, main page]
Scribd
Upload
293 views3 pages

CH 14 - Translation Solution

1) The document provides a translation worksheet for Sul Corporation's 2011 financial statements from euros to U.S. dollars using various historical and current exchange rates. 2) It also shows the accounting entries on Parent Company (PET's) books to record its equity investment in Sul under the equity method, including recognizing income from Sul, equity adjustments from translation, and dividends received from Sul. 3) Additionally, it provides the computation of amortization of a patent held by Sul that is translated from euros to dollars.

Uploaded by

Josua Pranata
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
293 views3 pages

CH 14 - Translation Solution

1) The document provides a translation worksheet for Sul Corporation's 2011 financial statements from euros to U.S. dollars using various historical and current exchange rates. 2) It also shows the accounting entries on Parent Company (PET's) books to record its equity investment in Sul under the equity method, including recognizing income from Sul, equity adjustments from translation, and dividends received from Sul. 3) Additionally, it provides the computation of amortization of a patent held by Sul that is translated from euros to dollars.

Uploaded by

Josua Pranata
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 3

FOREIGN CURRENCY FINANCIAL STATEMENTS

(TRANSLATION)

P14-4 From Beams, Anthony, Bettinghaus, and Smith, Advanced Accounting, 11th ed.

Sul Corporation *
Translation Worksheet for 2011
Euros Exchange Rate U.S. Dollars
Debits

Cash € 1,000,000
.60 (C) $ 600,000

Accounts Receivable 2,000,000


.60 (C) 1,200,000

Inventories 4,000,000
.60 (C) 2,400,000

Equipment 8,000,000
.60 (C) 4,800,000

Cost of Goods Sold 4,000,000


.55 (A) 2,200,000

Depreciation Expense 800,000


.55 (A) 440,000

Operating Expenses 2,700,000


.55 (A) 1,485,000

Dividends 500,000
.54 (H) 270,000

Total € 23,000,000 $13,395,000

Credits
Accumulated Depreciation -
Equip € 2,400,000
.60 (C) $ 1,440,000

Accounts Payable 3,600,000


.60 (C) 2,160,000

Capital Stock 5,000,000


.50 (H) 2,500,000
Retained Earnings - .50**
Jan. 1, 2011 2,000,000 -- 1,000,000

Sales 10,000,000
.55 (A) 5,500,000
Equity adjustment from
plug
Translation (AOCI) 795.000
Total € 23,000,000 $13,395,000

* Functional Currency for Sul Corporation is the Euro (€).

** Note that on the worksheet retained earnings always appears at its beginning balance. Thus,
in the year of acquisition, it is translated at the historical rate. But in all subsequent years,
retained earnings will not be translated --- it will appear in the U.S. dollars column as last
years ending balance from the Statement of Retained Earnings. Thus, on the Translation
worksheet for year 2012, retained earnings (in dollars) will be $2,105,000.

Accounting for Sul under the Equity Method

Euros U.S. Dollars


CS 5,000,000 7,000,000 Investment in Sul $ 4,000,000
RE 2,000,000 x .5000 BV Sul Net Assets 3,500,000
BV 7,000,000 3,500,000 Patent $ 500,000

Computation of Amortization of Patent


Euros Rate Dollars
Beg. Bal. (01/01/11) 1,000,000 .50 (H) 500,000
Amortization (10%) ( 100,000 ) .55 (A) ( 55,000 )
900,000 445,000
Equity Adjustment from
Translation (AOCI) ---- plug 95,000
End. Bal. (12/31/11) 900,000 .60 (C) 540,000

Income Summary – Sul Income from Sul


2,200,000 5,500,000
440,000 55,000 1,375,000
1,485,000
1,375,000 1,320,000

Investment in Sul Equity Adj. from Trans.


4,000,000 795,000
2,170,000 270,000 95,000
40,000
5,940,000 890,000

JOURNAL ENTRIES ON PET’S BOOKS

To record Income from Sul:


Investment in Sul 2,170,000
Income from Sul 1,375,000
Equity Adjustment from Translation (AOCI) 795,000

To record Patent Amortization:


Investment in Sul 40,000
Income from Sul 55,000
Equity Adjustment from Translation (AOCI) 95,000
To record dividends from Sul:
Cash 270,000
Investment in Sul 270,000

You might also like