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On January 1, 20X1, Popular Creek Corporation organized RoadTime...

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On January 1, 20X1, Popular Creek Corporation organized RoadTime...

On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows: Debit (SFr) Credit (SFr) Cash 7000 Accounts Receivable 20000 Receivable from Popular Creek 5000 Inventory 25000 Plant and Equipment 100000 Accumulated Depreciation 10000 Accounts Payable 12000 Bonds Payable 50000 Common Stock 60000 Sales 150000 Cost of goods sold 70000 Depreciation Expense 10000 Operating Expense 30000 Dividend paid 15000 Total SFr 282,000 SFr 282,000

Additional Information 1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to RoadTime. 2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.

3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1.

4. The dividends were declared and paid on November 1.

5. Exchange rates were as follows: January 1 1SFr=$.73 March 1 1SFr=$.74 November 1 1SFr=$.77 December 31 1SFr=$.80 20X1 Average 1SFr=$.75 6. The Swiss franc is the functional currency.

Required (a) Prepare schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars. (8 marks)

(b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary? (3 marks)

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Answered by phionanampijja8 on coursehero.com

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