The following account balances are for the Agee Company as of January 1, 2013, a
ID: 2417505 • Letter: T
Question
The following account balances are for the Agee Company as of January 1, 2013, and December 31, 2013. All figures are denominated in kroner (Kr).
Agee issued additional shares of common stock during the year on April 1, 2013. Common stock at January 1, 2013, was sold at the start of operations in 2004.
It purchased buildings in 2005 and sold one building with a book value of Kr 15,000 on July 1 of the current year.
Relevant exchange rates for 1 Kr were as follows:
Assuming the U.S. dollar is the functional currency and retained earnings at January 1, 2013, total $59,600, what is the remeasurement gain or loss for 2013? (Input the amount as a positive value.)
Assuming the foreign currency is the functional currency and retained earnings at January 1, 2013, total $69,319, what is the translation adjustment for 2013? (Input the amount as a positive value.)
January 1, 2013 December31, 2013 Accounts payable (7,000) (14,000) Accounts receivable 36,000 86,000 Accumulated depreciation—buildings (27,000) (32,000) Accumulated depreciation—equipment 0 (5,700) Bonds payable—due 2016 (57,000) (57,000) Buildings 116,000 96,000 Cash 42,000 8,700 Common stock (66,000) (82,000) Depreciation expense 0 22,000 Dividends (10/1/13) 0 39,000 Equipment 0 37,000 Gain on sale of building 0 (6,700) Rent expense 0 18,200 Retained earnings (37,000) (37,000) Salary expense 0 27,000 Sales 0 (108,000) Utilities expense 0 8,500
Explanation / Answer
Answer
Answer a.
Assuming the U.S. dollar is the functional currency
The table showing remeasurement gain or loss for 2013
Particulars
Debit balance
Credit Balance
Exchange rate
Kroner
Dollar
Kroner
Dollar
Accounts payable
3.35
14000
46900
Accounts Receivables
3.35
86000
288100
Accumulated Depreciation -Building
2.55
32000
81600
Accumulated Depreciation -equipment
2.95
5700
16815
Bonds payable -due 2016
3.35
57000
190950
Buildings
2.55
96000
244800
Cash
3.35
8700
29145
Common Stock 2004
2.75
66000
181500
Common Stock April 1 ,2013
2.95
16000
47200
Depreciation on building
2.55
16300
41565
Depreciation on Equipment
2.95
5700
16815
Dividend (10/1/13)
3.25
39000
126750
Equipment
2.95
37000
109150
Gain on sale of building
3.15
6700
21105
Rent Expense
3.05
18200
55510
Retained Earnings
-
37000
59600
Salary Expense
3.05
27000
82350
Sales
3.05
108000
329400
Utilities Expenses
3.05
8500
25925
Remeasurement gain
45040
342400
1020110
342400
1020110
Answer b.
Assuming the foreign currency is the functional currency
Table showing translation adjustment for 2013
Particulars
Debit balance
Credit Balance
Exchange rate
Kroner
Dollar
Kroner
Dollar
Accounts payable
3.35
14000
46900
Accounts Receivables
3.35
86000
288100
Accumulated Depreciation -Building
3.35
32000
107200
Accumulated Depreciation -equipment
3.35
5700
19095
Bonds payable -due 2016
3.35
57000
190950
Buildings
3.35
96000
321600
Cash
3.35
8700
29145
Common Stock 2004
2.75
66000
181500
Common Stock April 1 ,2013
2.95
16000
47200
Depreciation on building
3.35
16300
54605
Depreciation on Equipment
3.35
5700
19095
Dividend (10/1/13)
3.25
39000
126750
Equipment
3.35
37000
123950
Gain on sale of building
3.15
6700
21105
Rent Expense
3.05
18200
55510
Retained Earnings
-
37000
69319
Salary Expense
3.05
27000
82350
Sales
3.05
108000
329400
Utilities Expenses
3.05
8500
25925
Translation adjustment balance
114361
342400
1127030
342400
1127030
Particulars
Debit balance
Credit Balance
Exchange rate
Kroner
Dollar
Kroner
Dollar
Accounts payable
3.35
14000
46900
Accounts Receivables
3.35
86000
288100
Accumulated Depreciation -Building
2.55
32000
81600
Accumulated Depreciation -equipment
2.95
5700
16815
Bonds payable -due 2016
3.35
57000
190950
Buildings
2.55
96000
244800
Cash
3.35
8700
29145
Common Stock 2004
2.75
66000
181500
Common Stock April 1 ,2013
2.95
16000
47200
Depreciation on building
2.55
16300
41565
Depreciation on Equipment
2.95
5700
16815
Dividend (10/1/13)
3.25
39000
126750
Equipment
2.95
37000
109150
Gain on sale of building
3.15
6700
21105
Rent Expense
3.05
18200
55510
Retained Earnings
-
37000
59600
Salary Expense
3.05
27000
82350
Sales
3.05
108000
329400
Utilities Expenses
3.05
8500
25925
Remeasurement gain
45040
342400
1020110
342400
1020110