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CHAPTER 20.doc

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  CHAPTER 20MULTIPLE CHOICES - COMPUTATIONAL 20-1:b Bad debt expense (S$ 6,000 x P28.20)P169,200Amortization of patents (S$ 4,000 x P28.20) 112,800Rent expense (S$ 10,000 x P28.20) 282,000 TotalP564,000  Average rate (P28.20) is used to translate all expenses since this is a reasonableestimation. 20-2:b Machinery [(24,000 Ringgit ÷ 10) x P10.42]P 25,008Equipment [(12,000 Ringgit ÷ 10) x P10.42] 12,504 Total depreciationP 37,512 20-3:d Accounts receivableP120,000Prepaid expenses 55,000Property and equipment (net) 275,000 TotalP450,000 20-4:a Depreciation expense (H$ 12,000 x P5.80)P 69,600Bad debts (H$ 8,000 x P5.80) 46,400Rent (H$ 20,000 x P5.80) 116,000 TotalP232,000  Average rate for the year is used in translating depreciation expense because this is morereasonable estimation than the rate when the related asset was acquired (P4.80). 20-5:d [25,000 LCU x (1 ÷ 2)] 20-6:d  Long-term receivable: [1,500,000 LCU x (1 ÷ 1.5 LCU)]P1,000,000 Long-term debt: [2,400,000 LCU x (1 ÷ 1.5 LCU)]P1,600,000 20-7:b (NT Dollar 10,000 x P1.70) 136  20-8:b Beginning inventory 40,000 RupeePurchases 300,000Goods available for sale340,000Ending inventory 30,000Cost of goods sold310,000 Rupee Translated cost of goods sold (310,000 Rupee x P.5745)P178,095 20-9:c  NZ DollarRatePhil Peso  Net assets, 1/1/01320,000P15P300,000Increase in net assets: Net income, 2005 (30,000 – 20,000)10,000P19 190,000 Net assets 12/31/01330,000P490,000 Net assets at current rate30,000P21 630,000 Translation adjustment, 2013 (credit)P140,000 20-10:b  Equipment [800,000 x (1 ÷ 50)]P16,000 Accumulated depreciation [560,000 x (1 ÷ 50)]P11,200 Depreciation [80,000 x (1÷ 50)]P 1,600 20-11:a (25,000 Rupee x P1.24) 20-12:d (5,000 Rupee x P1.30) 20-13:c Investment cost, Jan. 1, 2013P402,000Less: Book and fair value of net assets acquired (300,000 Rp x P1.20) 360,000GoodwillP 42,000  Pesos Rupee GoodwillP42,000 35.000 (P42,000 / P1.20)Impairment 4,340 (3,500 Rp x P1.24) 3,500 BalanceP37,66031,500 Translated goodwill (31,500 Rp x P1.32)P41,580 137  20-14:b Translation adjustment from translating the trial balanceP12,000 Cr Translation adjustment from translating goodwill (per 20-13) 3,920 Cr  Total translation adjustmentP15,920 20-15:b Investment in Subsidiary account, Jan. 1, 2013P1,600,000Share in subsidiary net income [(800,000 yen x 70%) x P.57] 319,200Translation adjustment (P25,000 x 70%) 17,500Share of subsidiary dividends [(50,000 yen x 70%) x P.59]( 20,650   )  Investment in Subsidiary account, December 31, 2013P1,916,050 20-16:d20-17: a  Phil PesoThailand Baht  Initial inventory transfer date:Selling priceP120,000÷1.6075,000 BCost (80,000)Profit 40,000  Ending Inventory (75,000 x 1.70) 127,500 20-18: a (P127,500 – 40,000) 20-19: a  Yen Exchange Rate Phil Peso  Net asset beginning200,000.44 88,000Comprehensive income200,000 .46 92,000 Net asset translated at rate:During the year400,000 180,000At end of year400,000.48 192,000 OCI - Translation adjustment (credit) (12,000    ) 20-20: a (70,000 rupee x P1.50) 20-21: c Investment costP1,210,000Book value of interest acquired (1,100,000 x 1.10) x .80 968,000 Goodwill 242,000 138  PROBLEMS Problem 20-1a.Pilipino CompanyTranslation Working PaperDecember 31, 2013 YenExchange RatePhil. Pesos Cash and cash equivalents40,000.40 CR16,000Accounts receivable120,000.40 CR48,000Inventory100,000.40 CR40,000Plant and equipment700,000.40 CR280,000Cost of sales360,000.425 AR153,000Operating expenses140,000.425 AR59,500Depreciation expenses60,000.425 AR25,500Total1,520,000622,000  Accumulated Other Comprehensive Income - Translation Adjustment  25,000Total debits647,000Accumulated depreciation240,000.40 CRP96,000Accounts payable80,000.40 CR32,000Common stock200,000.44 HR88,000Retained earnings, Jan. 1400,000.44 HR176,000Sales600,000.425 AR255,000Total credits1,5200,000647,000 CR – Current Rate AR – Average Rate HR – Historical Rate b. Proof of Translation Adjustment YenTranslation Rate Phil. Pesos  Net assets at beginning of year600,000.44264,000Adjustment for changes in net assets Position during year  Comp. Income for the year40,000.42517,000 Net assets translated at rates in effect For those items281,000 Net assets at end of year640,000.40256,000Change in translation adjustment during year  (to OCI) – net decrease (debit)25,000Accumulated OCI – translation adjustment,1/1-0-Accumulated OCI – translation adjustment, Dec. 31 (debit)25,000 139
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