Assignment 03
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- Determine the Direct and Indirect exchange rates of any two currencies on the two dates and show the impact of changes in exchange rates on Imports and Exports. (Note: You can assume any two currencies and any two dates). (2 Marks)
- On Jan, 1 2014, Peter Corp. (a U.S. based company) formed a new subsidiary in Saudi Arabia, Saeed Inc., with an initial investment of 30,000 SAR.
- Anwar and Bravo wish to form the A&B partnership.Anwar contributes land with a book value of $ 175,000 (current value of $200,000) and a building with a book value of $200,000 (current value of $300,000).Bravo will contribute cash. If the partners plan to share profits and losses equally after the formation of the partnership and assuming they have agreed to equal capital contributions, how much cash will Bravo have to contribute to form the partnership? Pass Journal entry to be recorded in A&B Firm.(1 Mark)
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Assume Saeed Inc.
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Purchases inventory evenly throughout 2014. The ending inventory is purchased Nov. 30, 2014.
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Uses straight-line depreciation on fixed assets.
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Declares and pays dividends on Nov. 30, 2014.
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Purchased the fixed assets on April 1, 2014.
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Uses SAR as the functional currency.
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Exchange Rates are given:
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Jan 1, 20140.260
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April 1, 20140.255
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Nov. 30, 20140.240
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Dec. 31, 20140.238
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REQUIRED
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Prepare a schedule to translate Saeed’s financial statements on Dec. 31, 2014 to U.S. dollars.(2 Marks)
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Accounts
SAR
Cash
5000
Account Receivable
12000
Inventory
32000
Note Receivables
5000
Plant & Equipment
70000
Cost of Goods sold
32000
Depreciation
2000
Other Expenses
18000
Dividends
16000
Total Debits
192000
ACC. OC – Translation Adjustment (Debit)
Adjusted Total Credit
Accumulated Depreciation
2000
Account Payable
12000
Bonds Payable
36000
Mortgage Payable
46000
Common Stock
30000
Sales
66000
Total Credits
192000
