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Kunci Kuis AKL 2
Kunci Kuis AKL 2
On November 1, 2013, Stateside Company (a U.S. manufacturer) sold an airplane for 1 million
New Zealand dollars (NZ$) to New Zealand company Aukland Corporation. Stateside will
receive payment on January 30, 2014 in New Zealand dollars. In order to hedge the accounts
receivable position, Stateside entered into a 90-day forward contract to sell 1 million New
Zealand dollars on January 30, 2014. On November 1, 2013, the 90-day forward rate is
US$0.73 per New Zealand dollar. The forward contract will be settled net. Account for the hedge
as a fair value hedge. Ignore the time value of money.
Required:
Record the journal entries that Stateside would need to prepare at November 1, 2013,
December 31, 2013 and January 30, 2014. December 31, 2013 is the fiscal year end.
Sales 730,000
12/31/13 Accounts Receivable (NZ$) 20,000
Cash 60,000
PROBLEM 2
Pan Corporation, a U.S. company, formed a British subsidiary on January 1, 2014 by investing
450,000 British pounds () in exchange for all of the subsidiary's no-par common stock. The
British subsidiary, Skillet Corporation, purchased real property on April 1, 2014 at a cost of
500,000, with 100,000 allocated to land and 400,000 allocated to a building. The building is
depreciated over a 40-year estimated useful life on a straight-line basis with no salvage value.
The British pound is Skillet's functional currency and its reporting currency. The British economy
does not have high rates of inflation. Exchange rates for the pound on various dates were:
Skillet's adjusted trial balance is presented below for the year ended December 31, 2014.
In Pounds
Debits:
Cash 220,000
Accounts receivable 52,000
Inventory 59,000
Building 400,000
Land 100,000
Depreciation expense 7,500
Other expenses 110,000
Cost of goods sold 220,000
Total debits 1,168,500
Credits
Requirement 2
Skillet Corporation
Translated Income Statement
For the Year Ended December 31, 2014
Sales revenue $996,000
Expenses:
Cash $369,600
Accounts receivable 87,360
Inventory 99,120
Building-net 659,400
Land 168,000
Total assets $1,383,480
Accounts payable $186,480
Stripe's adjusted trial balance is presented below for the year ended December 31, 2014.
In Pounds
Debits:
Cash 200,000
Accounts receivable 72,000
Notes receivable 99,000
Building 400,000
Land 100,000
Depreciation expense 7,500
Other expenses 115,000
Salary expense 208,000
Total debits 1,201,500
Credits
Debits
Cash 200,000 $1.65 =$330,000
Accounts receivable 72,000 $1.65 = 118,800
Notes receivable 99,000 $1.65 = 163,350
Building 400,000 $1.62 = 648,000
Land 100,000 $1.62 = 162,000
Depreciation expense 7,500 $1.62 = 12,150
Other expenses 115,000 $1.64 = 188,600
Salary expense 208,000 $1.64 = 341,120
_________
Total debits $1,964,020
Credits
Requirement 3
Stripe Corporation
Remeasured Balance Sheet
December 31, 2014
Cash $330,000
Exchange
In Pounds Rates In Dollars
Stockholders' Equity - 12/31/13 1,200,000 $1.60H $1,920,000
Net Income 400,000 $1.62A 648,000
Dividends - 11/1/14 (200,000) $1.64H (328,000)
Translation Adjustment 70,000
Stockholders' Equity - 12/31/14 1,400,000 $1.65C $2,310,000
Required:
Determine Puddle's income from Soake for 2014, and the balance of Puddle's Investment in
Soake account at December 31, 2014. Soake's books are kept in pounds, which is the
functional currency.