QUESTION 8
Sendelbach 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. Therefore, the subsidiary maintains a
ledger denominated in Mexican pesos (Ps) and a general ledger in
Canadian dollars (C$). As of December 31, 2020, 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
The Canadian subsidiary’s functional currency is the Canadian
dollar, and Sendelbach’s reporting currency is the U.S. dollar. The
Canadian and Mexican operations are not viewed as separate
accounting entities.
The building and equipment used in the Mexican operation were
acquired in 2010 when the currency exchange rate was C$0.25 = Ps
1.
Purchases of inventory were made evenly throughout the fiscal
year.
Beginning inventory was acquired evenly throughout 2019; ending
inventory was acquired evenly throughout 2020.
The Main Office account on the Mexican records should be
considered an equity account. This balance was remeasured into
C$7,200 on December 31, 2020.
Currency exchange rates for 1 Ps applicable to the Mexican
operation follow:
The December 31, 2019, consolidated balance sheet reported a
cumulative translation adjustment with a $56,950 credit (positive)
balance.
The subsidiary’s common stock was issued in 2007 when the
exchange rate was $0.49 = C$1.
The subsidiary’s December 31, 2019, retained earnings balance
was C$155,590, an amount that has been translated into
U.S.$66,663.
The applicable currency exchange rates for 1 C$ for translation
purposes are as follows:
Remeasure the Mexican operation’s account balances into Canadian
dollars. (Note: Back into the beginning net monetary asset or
liability position.)
Prepare financial statements (income statement, statement of
retained earnings, and balance sheet) for the Canadian subsidiary
in its functional currency, Canadian dollars.
Translate the Canadian dollar functional currency financial
statements into U.S. dollars so that Sendelbach can prepare
consolidated financial statements.
- Week 6 Homework Question 8 Sendelbach Corporation Is A U S Based Organization With Operations Throughout The World One 1 (14.01 KiB) Viewed 51 times
- Week 6 Homework Question 8 Sendelbach Corporation Is A U S Based Organization With Operations Throughout The World One 2 (38.53 KiB) Viewed 51 times
Req A Reg Band b. Prepare financial statements (income statement, statement of retail subsidiary in its functional currency, Canadian dollars. C. Translate the Canadian dollar functional currency financial statement consolidated financial statements. (Round U.S. Dollar values to 2 decimal places. Amounts to be deductes SENDELBACH CORPORATION Financial Statements For the Year Ended December 31, 2020 Canadian U.S. Dollar Dollar Income Statement: Sales CS 368,840 Cast of goods sold Gross profit cs 368,840 s 0.00 Depreciation expense Salary expense Utility expense Gain on sale of equipment Remeasurement loss Net income cs 368,840 S 0.00 cs Statement of Retained Earnings: Relained earnings, 1/1/20 Net income Depreciation expense Retained earnings, 12/31/20 cs 0 S 0.00 Balance Sheet: Assets: csi Cash Receivables Inventory Building and equipment Accumulated depreciation cs 05 0.00 cs Total Llabilities and Equities: Accounts payable Notes payable Common stock Retained earnings Total CS S 0.00