Class is called international accounting
Initials: 1. Case (15 Points) ============================================================== Alexander Corporation (a U.S based company) acquired 100 percent of a Swiss company for 8.2 million Swiss francs on January 1, Year 1. At the date of acquisition, the exchange rate was $0.70 per franc. The acquisition price is attributable to the following assets and liabilities denominated in Swiss francs. Cash……………………. 1,000,000 Inventory……………….. 2,000,000 Non-current assets……. 7,000,000 Notes Payable…………. 1,800,000 Capital Stock…………… 4,200,000 Retained Earnings..……... 4,000,000 Alexander Corporation prepares consolidated financial statements on December 31, Year 1. By the date, the Swiss franc appreciated to $0.75. The average rate for Year 1 was $0.73. a) What is the current rate? b) What is the historical rate? c) Using the current method, prepare a balance sheet in francs and USD. 3. Case (15 Points) ============================================================== d) Using the current method and the below information in Swiss francs, translate the below income statement into USD. Sales = 500,000 Cost of Goods sold = 300,000 Operating expense = 90,000 Depreciation = 10,000 Income tax = 35,000 francs f/x rate USD Sales Cost of Goods sold Gross profit Operating expense Depreciation Income before tax Income taxes Net income 4. Case ============================================================== e) The Year 1 financial statements of the Brazilian subsidiary of Artemis Corporation (a Canadian Company) revealed the following: Beginning inventory…………………. 100,000 Purchases……………………………. 500,000 Ending Inventory……….................... 150,000 Cost of goods sold …….................... 450,000 Canadian dollar (C$) exchange rates for 1 BRL are as follows: January 1, Year 1…………………… C$0.45 Average, Year 1…………………….. C$0.42 December 31, Year 1….................... C$0.38 The beginning inventory was acquired in the last quarter of the previous year, when the exchange rate was C$0.50 = BRL 1; ending inventory was acquired in the last quarter of the current year, when the exchange rate was $C0.40 = BRL 1. Assuming that the current method is the appropriate method of translation, determine the amounts at which the Brazilian subsidiary’s ending inventory and cost of goods sold should be included in Artemis’s Year 1 consolidated financial statements 4. Case ============================================================== Assuming that the temporal method is the appropriate method of translation, determine the amounts at which the Brazilian subsidiary’s ending inventory and cost of goods sold should be included in Artemis’s Year 1 consolidated financial statements University of the Incarnate Word - Acct 6330 Spring Session – Final Exam - Page 6 of 6