Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Accounting Basics Expert

Accounting


Home >> Accounting Basics

Question 4
a)(i) Explain what balance sheet exposure and transaction exposure are and the difference between them.
(ii) Explain what a translation adjustment is and the circumstances under which it would net to a zero balance.
(8 marks)
b) FT Pte Ltd is a UK subsidiary of a Singaporean company, Patriot Pte Ltd. Extracted from FT Pte Ltd's financial statements is the following:
British Pounds (GBP)
Beginning inventory £200,000
Purchases 800,000
Ending Inventory 100,000
Cost of Goods Sold 900,000
The Singaporean dollar ($ SGD) exchange rates for 1 GBP over the year are as follows:
January 1 £2.00 GBP
Average for the year 1.98
December 31 1.94
The beginning inventory was bought during the last quarter of the previous year when the exchange rate was $1SGD = £2.01 GBP. The ending inventory was acquired in the last quarter of the current year when the exchange rate was $1SGD = £1.96 GBP.
Required:
Demonstrate the different ways in which financial statements can be translated by:
(i) Using the current rate method of translation to determine the amounts at which the UK subsidiary's ending inventory and cost of goods sold should be included in Patriot Pte Ltd's consolidated financial statements.
(ii) Using the temporal method of translation to determine the amounts at which the UK subsidiary's ending inventory and cost of goods sold should be included in Patriot Pte Ltd's consolidated financial statements.
(12 marks)
c) Suppose Patriot Pte Ltd is looking to expand and is considering the acquisition of SUL Pte Ltd, another UK company. Before doing so, the CFO was asked to prepare an analysis of SUL Pte Ltd's financial statements to determine their cash flows, performance and position, and also to compare SUL Pte Ltd against similar companies in Singapore. Before she can start, she needs to translate the financial statement into Singapore Dollars. Do you think Patriot Pte Ltd should use the current rate method, the temporal method or some other method to translate SUL Pte Ltd's financial statements? Explain the reasons.
(5 marks)

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91232184

Have any Question?


Related Questions in Accounting Basics

Question - on december 31 2016 alpha company invested 10000

Question - On December 31, 2016, Alpha Company invested $10,000 in 2 years, certificate with a 4% annual interest rate with semi-annual compounding. Use this information to determine the maturity value of the certificate ...

Question - below are three independent situationsa in

Question - Below are three independent situations. a. In August, 2018 a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued Wesley Co. for $800,000. Counsel be ...

Question - henry company physical inventory on december 31

Question - Henry Company, physical inventory on December 31, 2017, merchandise with a cost of $439,670 was on hand at that date. Following items were all excluded from the $439,670. 1. Merchandise of $65,330 which is hel ...

Question - assume that a parent company owns 100 of its

Question - Assume that a Parent company owns 100% of its Subsidiary. On January 1, 2016 the Parent company had a $1,000,000 (face) bond payable outstanding with a carrying value of $1,070,000. The bond was originally iss ...

Question - adams jackson invests 53400 at 8 annual interest

Question - Adams Jackson invests $53,400 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Adams withdraws the accumulated amount of money. ...

Question - recent financial statements of general mills inc

Question - Recent financial statements of General Mills, Inc. report net sales of $12,442,000,000. Accounts receivable are $912,000,000 at the beginning of the year and $953,000,000 at the end of the year. Compute Genera ...

Questions 1did the employees know of the lost inventory2why

Questions: 1 Did the employees know of the lost inventory? 2 Why the auditor did not take any action against the insurance company? 3 Was there any conspiracy involved in between the insurance company and the auditor? 4 ...

Question - nmc has an average charge per client per of

Question - NMC has an average charge per client per of $12.00.its overhead are $15,956 and the trainer takes $* from every commission /charge. How many clients does the NMC need to serve in a year to break even? The trai ...

Question - the company uses pre-numbered purchase orders

Question - The company uses pre-numbered purchase orders. Only the Purchase Manager is able to use and authorize the purchase orders. Once the purchase order has been sent to a supplier, a copy is given to the accounting ...

Assignment -company name - hewlett packard1 what does your

Assignment - Company name - Hewlett Packard. 1. What does your company produce? 2. Analyze the trends in sales, cost of goods sold, gross profit, and operating income for your manufacturing company. Prepare a trend analy ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved