Note payable and accurred interest are payable

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Reference no: EM131296212

The Isle of Palms Company(IOP), a U.S.-based entity, has a wholly owned subsidairy in Israel that has been determined as having the Israeli shekel (ILS) as its functional currency. On October 1, 2014, the Israeli subsidiary borrowed 500,000 Swiss France(CHF) from a bank in Geneva for two years at an interest rate of 5 percent per year. The note payable and accurred interest are payable at the date of muturity. On December 31,2015, the Israeil subsidiary has the following foreign currency balances on its books:

Interest expense CHF 25,000

Interest payable CHF 31,250

Note payable CHF 500,000

Relevant exchange rates between the Israeil, snekel(ILS) and swiss franc(CHF), and between the U.S. dollar (USD) and Israeil snekel (ILS) follows:

ILS per CHF USD per ILS

October 1, 2014 3.86 0.30

January 1, 2015 3.91 0.29

Average for 2015 3.95 0.27

December 31,2015 4.02 0.25

a. Determine the Israeil snekel amounts at which the Swiss franc balances should be reported on the Israel subsidiary's December 31,2015, trail balance.

December 31,2015 CHF Exchange Rate ILS*

Interest expense 25,000 =

Interest payable 31,250 =

Note payable 500,000 =

b. Determine the U.S. dollar amounts at which the Swiss franc balances should be included in IOP's 2015 consolidated financial statements. (Round your answers to 2 decimal places.)

December 31, 2015 CHF Exchange rate ILS*

Interest expense 98,750 x =

Interest payable 125,625 x =

Note payable 2,010,000 x =

Reference no: EM131296212

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