Zugar Company is domiciled in a country whose currency is the dinar. Zugar begin
ID: 2576365 • Letter: Z
Question
Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 20,000 dinars accounts receivable of 80,000 dinars, and land that cost 200,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 150,000 dinar note payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for 120,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a 100,000 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 anuary 1, 2017 May 1, 2017 June 1, 2017 December 31, 2017 $ 0.33 1 dinar 0.36 1 0.37 1 0.39 1 0.41 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
Solution:
a) Calculation of the Translation Adjustment for this Subsidary for the Year 2017:
b) Calculation of the Remeasurment Gain or Loss for 2017:
c) Calculation of the Remeasured Value of the Land Account:
Net assets, 1/1, Changes in net assets 300,000 Dinars * $0.36 = $108,000 Notes Payable (150,000) Dinars * $0.36 = (54,000) Rendered services 120,000 Dinars * $0.37 = $44,400 Incurred expense (100,000) Dinars * $0.39 = ($39,000) Net assets, 12/31 170,000 Dinars $59,400 Net assets, 12/31 at current exchange rate 170,000 Dinars $0.41 = $69,700 Translation adjustment (positive) ($10,300)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.