国际会计学习题

1、RadCo International is a U.S.firm with a wholly owned subsidiary in France.the basic assumptions involved in the French subsidiary and its interaction with the parent company are as follows:

Balance Sheet( in euro )

Income Statement ( in euro)

a. The functional currency of the subsidiary is the euro,and the financial statements have been recast in U.S.GAAP to assist in the translation process.

b. Capital stock was issued and fixed assets were acquired when the exchange rate was 1euro=1.05$,dividends are paid at a rate of $1.3644 per euro.

c. Purchases, sales, and other expenses occurred evenly throughout the year.

d. There is a zero beginning balance in the cumulative translation adjustment (CTA) account.

e. Inflation in France has been in the single digits in recent years.

Requirement: Translate the financial statements into U.S. dollars, and The result of computation should be retained two decimals.

2. A corporation (U.S) purchased equipment worth 2 million German marks from B corporation (Germany) at the beginning of the year. The transaction was denominated in German marks. The exchange rate at the time was US$0.65=1 DM. However, due to a stronger economy, the German mark had strengthened against the U.S. dollar resulting in an exchange rate of US$0.70=1 DM at year end.

(1) Determine the transaction gain/loss that A corporation will report in its year-end income statement.

(2) Determine the transaction gain/loss B corporation will report in its year-end income statement. Why?

3、Assume that a U.S. firm imports equipment from Germany on March 1 for 200,000 euro when the exchange rate is $1.3112 per euro. payment in euro does not have to be made until April 30.Assume that on March 31,the exchange rate is $1.3500 and on April 30 is $1.3300,Also,assume that the firm’s book are closed at the end of the calendar quarter. Please write out the entries related to purchase from Germany according to the two-transaction approach.

1、Income Statement ( in euro)

Balance Sheet( in euro )

Retained earnings=6222.97-3240.45=2982.52

CTA=45605.07-8186.4-14735.52-6510-2982.52=13190.63

2、(1) Loss (2’)

DM 2,000,000×(US$0.7-US$0.65)=US$100,000 (3’)

(2) B corporation will report no gain/loss in its year-end income statement (2’) since the transaction is denominated in its home currency (3’).

3、1. March 1 Purchases/equipment 262,240

Accounts payable 262,240

March 31 Foreign exchange loss 7,760

Accounts payable 7,760

April 30 Accounts payable 270,000

Foreign exchange gain 4,000

Cash 266,000