Reference no: EM131819083
Problem - The following account balances are for Carollo, Inc as of January 1, 20x3 and December 31, 20x3. All amounts are denominated in kroner.
|
01/01/x3
|
12/31/x3
|
|
Cash
|
35,000
|
8,000
|
|
Accounts receivable
|
35,000
|
79,000
|
|
Equipment
|
-
|
30,000
|
|
Buildings
|
118,000
|
97,000
|
|
A/D-Equipment
|
-
|
(5,000)
|
|
A/D-Buildings
|
(20,000)
|
(25,000)
|
|
Accounts payable
|
(18,000)
|
(24,000)
|
|
Bonds payable due 20x6
|
(50,000)
|
(50,000)
|
|
Common stock
|
(70,000)
|
(80,000)
|
|
Retained earnings
|
(30,000)
|
(30,000)
|
|
Dividends
|
|
32,000
|
|
Sales
|
|
(80,000)
|
|
Salary expense
|
|
20,000
|
|
Rent expense
|
|
14,000
|
|
Depreciation expense
|
|
15,000
|
|
Utilities expense
|
|
5,000
|
|
Gain on sale of building
|
|
(6,000)
|
1. Carollo issued additional shares of common stock on April 1, 20x3. Common stock at January 1, 20x3 was issued at the start of operations in 20x0
2. Building was purchased in 20x1 and sold one building with a book value of 16,000 on July 1, 20x3.
3. Equipment was acquired on April 1, 20x3.
4. Dividend was paid on October 1, 20x3
5. Relevent exchange rates were as follows:
|
20x0
|
2.40
|
|
20x1
|
2.20
|
|
January 1, 20x3
|
2.50
|
|
April 1, 20x3
|
2.60
|
|
July 1, 20x3
|
2.80
|
|
October 1, 20x3
|
2.90
|
|
December 31, 20x3
|
3.00
|
|
Average for 20x3
|
2.70
|
Required -
1. Assume the US$ is the functional currency and retained earnings at January 1, 20x3 totalled $52,600. Use the trial balance approach to compute remeasurement gain or loss for 20x3. Also provide a schedule proofing the amount obtained.
2. Assume the Kroner is the functional currency and retained earnings at January 1, 20x3 totalled $62,319. Use the trial balance approach to compute translation gain or loss for 20x3. Also provide a schedule proofing the amount obtained.