question archive Suppose a Canadian company sold merchandise to a British ?rm for 100,000 British pounds
Suppose a Canadian company sold merchandise to a British ?rm for 100,000 British pounds
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Suppose a Canadian company sold merchandise to a British ?rm for 100,000 British pounds. Assume the exchange rates for the British pound were as follows: Date of sale: $2.35 Date of collection: $2.34 What was the exchange rate gain/loss for the Canadian company on this transaction? 0 A. $3,000 gain 0 B. $2,000 gain 0 C. $1,000 loss 0 D. $3,000 loss
If a parent company and its 100% owned subsidiary have accounts receivable from external sources in the amounts of $35,000 and $10,000, respectively, the consolidated balance sheet for the parent and its subsidiary will show O A. both amounts, but it will list them in two separate accounts to help investors better understand the ?nancial statements O B. only the parent's account receivable balance O c. net accounts receivable of $25,000 O D. one accounts receivable balance of $45,000
On January 2, 2020, Didek Corporation purchased 30% of the outstanding shares of Sim Corporation for $500,000. Net income reported by Sim Corporation for 2020 and 2021 was, respectively, $90,000 and $130,000. Dividends paid by Sim Corporation during 2020 and 2021 were, respectively, $30,000 and $45,000. Didek Corporation has representation on the board of directors for Sim Corporation. The investment in common shares account will appear on Didek Corporation's December 31, 2021, balance sheet at O A. $575,000 O B. $500,000 O C. $543,500 O D. $566,000
On September 1, 2020, Jacob Lid. purchased 100,000 common shares for a 15% interest in BlueSky Drilling Corporation for $15 per share, and paid a $7,000 brokerage commission for the purchase. Jacob Lid. intends to hold this investment for several years and does not have significant influence over BlueSky Drilling. The market value of the BlueSky Drilling shares at December 31, 2020, is $19 per share. On February 15, 2021 BlueSky Drilling distributed a total dividend to its shareholders of $50,000. Jacob Lid. sold one-half of the shares on June 30, 2021 for $16 per share. Which of the following is the correct journal entry on June 30, 2021 to record the sale of shares? Cash 800,000 O A. Loss on Sale of Long-Term Investments 150,000 Fair Value Valuation Allowance 200,000 Long-Term Investments 750,000 Cash 800,000 O B. Loss on Sale of Short-Term Investments 150,000 Fair Value Valuation Allowance 200,000 Short-Term Investments 750,000 Cash 800,000 O C. Loss on Sale of Long-Term Investments 145,000 Long-Term Investments 945,000 Cash 800,000 OD. Loss on Sale of Investment 145,000 Investment in BlueSky Drilling Common Shares 945,000
LTI Corp. purchased 500 shares as a short-term investment for $5,100 on January 4. The company received a 100% stock dividend on November 30. The market value of one share on December 31 was $6.30. The carrying value per share as at December 31 would be O A. $10.20 O B. $6.30 O C. $5.10 O D. $3.15
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1) Loss = $ 1000.
2) one account receivable balance of $ 45000.
3) Investment Balance = $ 543500.
4) Journal entry on 30-06-2021
Cash A/c..........Dr...........................................................................800000
Loss on sale of LT investment A/c.......Dr..........................150000
To Fair value valuation allowance A/c................................................200000
To Long term investment A/c.................................................................750000
( Option A )
5) Carrying value = $ 6.30
1) Receivable Br. Pounds= 100000
As the value of canadian dollar on date of collection is reduced as compared to value as on date of sale. So company will beer foreign exchange Loss.
FE Loss= ($ 2.34-$ 2.35) x 100000= $ 1000
2) Since the receivable is from External customer, it will be consolidated in consolidated Balance sheet.
3) As per IAS 28-
Associate: an entity in which an investor has significant influence but not control or joint control.
Significant influence: power to participate in the financial and operating policy decisions but not control them.
Under the equity method of accounting, an equity investment is initially recorded at cost and is subsequently adjusted to reflect the investor's share of the net profit or loss of the associate.
Distributions received from the investee reduce the carrying amount of the investment. Adjustments to the carrying amount may also be required arising from changes in the investee's other comprehensive income that have not been included in profit or loss
Cost of Acquisition on 2nd January 2020......................$ 500000
Add: Share of Net income of 2020.....................................$ 27000
Less: Dividend received for 2020.......................................($ 9000)
Balance as on 31st December 2020..........................$ 518000
Add: Share of Net income of 2021......................................$ 39000
Less: Dividend received for 2021.......................................($ 13500)
Balance as on 31st December 2021...........................$ 543500
4)
Fair value Gain on 31st Dec. 2020= ( $ 19-15 ) x 100000 = $ 400000
1/2 stocks sold = 50000.
Loss on sale = ( $ 16-19) x 50000 = $ 150000.
sale price =$ 16 x 50000 =$ 800000.
5) Since the investment is short term, its carrying value will remain equal to market value.
