Reference no: EM132982700

Questions -

Q1) Company A, a domestic entity, sold goods to a British company on 3/5 with the transaction denominated in Pounds. The sales price of the goods was £100,000, and the cost of the goods was $60,000. The receivable is payable in full on 4/5, and Company A prepares their financials monthly. Relevant exchanges rates are 3/5 £1 = $1.20, 3/31 £1 = $1.23, and 4/5 £1 = $1.18. How much would Company A book to their Accounts Receivable on 3/5?

On 3/31, how much would they need to revalue A/R by?

On 4/5, how much would they collect in U.S. dollars?

On 4/4, how much would that gain or loss be?

Q2) Company A is foreign subsidiary of a domestic company and Company A's functional currency is the Euro. On company A's financials / trial balance at the end of year 20X1, they reported total assets of €500,000, total liabilities of €300,000, and total net income of €50,000. The spot rate on 12/31/X0 was €1 = $1.05, the spot rate on 12/31/X1 was €1 = $1.04, and the average rate for 20X1 was €1 = $1.07. The equity accounts on their trial balance translated to a net credit balance of $175,000. Based on this information:

What would the translated balance in U.S. dollars be for total assets? (use negative number if a credit).

What would the translated balance in U.S. dollars be for total liabilities? (use negative number if a credit).

What would the translated balance in U.S. dollars be for total net income (use negative number if a credit).

What would the accumulated translation adjustment be? (use negative number if a credit).