Adv accounting unit 7

For this assignment, use your Fundamentals of Advanced Accounting text to complete the following:

· Problem 23 on page 427. For this problem, use your knowledge of foreign exchange rate translation.

· Problem 26 on page 428. You will apply your knowledge of foreign exchange rates and the translation process for financial statements.

Review the Translating Exchange Rates Scoring Guide to ensure you complete all grading criteria.

The following accounts are denominated in rubles as of December 31, 2017. For reporting purposes, these accounts need to be stated in U.S. dollars. For each account, indicate the exchange rate that would be used to translate the ruble balance into U.S. dollars under the current rate method. Then, again for each account, indicate the exchange rate that would be used to remeasure the ruble balance to U.S. dollars using the temporal method. The company was started in 2012. The buildings were acquired in 2013 and the patents in 2015.

	Translation	Remeasurement
Accounts payable
Accounts receivable
Accumulated depreciation—buildings
Advertising expense
Amortization expense (patents)
Buildings
Cash
Common stock
Depreciation expense
Dividends (10/1/17)
Notes payable—due in 2020
Patents (net)
Salary expense
Sales

Exchange rates for 1 ruble are as follows:

2012	1 ruble	= $0.28
2013	1	= 0.26
2015	1	= 0.25
January 1, 2017	1	= 0.24
April 1, 2017	1	= 0.23
July 1, 2017	1	= 0.22
October 1, 2017	1	= 0.20
December 31, 2017	1	= 0.16
Average for 2017	1	= 0.19

26. Sullivan’s Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 60,000 pounds. The subsidiary immediately borrowed 140,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 200,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 8,000 pounds per month. By year-end, rent payments totaling 80,000 pounds had been received, and 16,000 pounds was in accounts receivable. On October 1, 4,000 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,000 pounds back to Sullivan’s Island Company on December 31, 2017. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow:

January 1, 2017	$2.00	= 1 pound
October 1, 2017	2.05	= 1
December 31, 2017	2.08	= 1
Average for 2017	2.04	= 1

Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and then translate these amounts into U.S. dollars.