Moose Corporation is a U.S.-based organization with operations throughout the wo
ID: 2448947 • Letter: M
Question
Moose Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. The subsidiary maintains a ledger denominated in Mexican Pesos (MXN) and a general ledger in Canadian dollars (CAD). As of 12/31/2015, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows:
Additional Information:
1) The Canadian subsidiary's functional currency is the Canadian dollar, and Moose's reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as seperate accounting entities.
2) The building & equipment used in the Mexican operation were acquired in 2005 when the currency exchange rate was CAD 0.25 = MXN 1.
3) Purchases should be assumed as having been made evenly throughout the fiscal year.
4) Beginning inventory was acquired evenly throughout 2014; ending inventory was acquired evenly throughout 2015.
5) The Main Office account on the Mexican Records should be considered an equity account. This balance was remeasured into CAD 7,350 on December 31, 2015.
6) Currency exchange rates for 1 MXN applicable to the Mexican Operations follow:
7) The December 31, 2014, consolidated balance sheet reported a cumulative translation adjustment with a $36,950 credit (positive) balance.
8) The subsidiary's common stock was issued in 2004 when the exchange rate was $0.45 = CAD 1.
9) The subsidiary's December 31, 2014, Retained Earnings balance was CAD 135,530, a figure that has been translated into US $70,421.
10) The applicable currency exchange rates for 1 CAD for translation purposes are as follows:
A) Remeasure the Mexican Operations figures into Canadian Dollars using the Trial Balance Method.
B) Prepare financial statements for both the Canadian subsidiary and Moose.
C) Remeasure the Mexican Operations using the Change in Net Monetary Assets/Liabilities.
D) Translate the Canadian Subsidiary using the Change in Net Monetary Assets/Liabilities Method.
Main Operation - Canada (CAD) Account Debit Credit Accounts Payable 35,000 Accumulated Depreciation 27,000 Buildings & Equipment 167,000 Cash 26,000 Common Stock 50,000 Cost of Goods Sold 203,000 Depreciation Expense 8,000 Dividends, 4/1/2015 28,000 Gain on Sale of Equipment, 6/1/2015 5,000 Inventory 98,000 Notes Payable, due in 2018 76,000 Receivables 68,000 Retained Earnings, 1/1/2015 135,000 Salary Expense 26,000 Sales 312,000 Utility Expense 9,000 Branch Operation 7,350 Total 640,530 640,530Explanation / Answer
Moose Corporation is a U.S.-based organization with operations throughout the wo
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