Zugar Company is domiciled in a country whose currency is the dinar. Zugar begin
ID: 2543872 • Letter: Z
Question
Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 29,200 dinars accounts receivable of 82,200 dinars, and land that cost 222,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 172,000 dinar note payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for 142,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a 122,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow: April 1, 2016 January 1, 2017 May 1, 2017 June 1, 2017 December 31, 2017 $0.55 = 1 dinar 0.59 1 0.61 1 a. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is the subsidiary's functional currency. What is the translation adjustment for this subsidiary for the year 2017? also that the U.S. dollar is the subsidiary's functional currency. What is the remeasurement gain or loss for 2017? translated value of the Land account? On the December 31, 2017, balance sheet, what is the remeasured value of the Land account? b. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume c. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2017, balance sheet, what is the (Input all amounts as positive.) ositive translation adjustment b. Gain remeasurement c. Translated value of land Remeasured value of landExplanation / Answer
a) Translation adjsutment Calculation of Net Asset dinnar exchange rate Amount in Cash 29200 Accounts Receivable 82200 Land 222000 Total asset 333400 Less : Notes Payable 172000 Net asset 161400 as on January 1 2017 Net Asset 161400 0.58 93612 Add : Cash received 142000 0.59 83780 Less : Cash paid 122000 0.61 74420 Net Asset A 181400 102972 as on December 31 2017 Net asset B 181400 0.63 114282 Positive translation adjustment to be made B-A 11310 b) Gain Remeasurement is as follows Only Monetary accounts has to be remeasured using the exchange rate at the end of the year So all adjustment in above will remain the same except land which has to be excluded for finding gain remeasurement. Calculation of Net Asset dinnar exchange rate Amount in Cash 29200 Accounts Receivable 82200 Less : Notes Payable 172000 Net asset -60600 as on January 1 2017 Net Asset -60600 0.58 -35148 Add : Cash received 142000 0.59 83780 Less : Cash paid 122000 0.61 74420 Net Asset A -40600 -25788 as on December 31 2017 Net asset B -40600 0.63 -25578 Remeasurement gain B-A 210 C) Translated value of Land Account is =222000*0.63 139860 Exchange rate is of December 31, 2017 Remeasured Value of Land Account is =222000*0.55 Exchange rate is of acquisition date 122100
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