Boerkian Co. started 2011 with two assets: Cash of §26,000 (Stickles) and Land t
ID: 2529496 • Letter: B
Question
Boerkian Co. started 2011 with two assets: Cash of §26,000 (Stickles) and Land that originally cost §72,000 when acquired on April 4, 2008. On May 1, 2011, the company rendered services to a customer for §36,000, an amount immediately paid in cash. On October 1, 2011, the company incurred an operating expense of §22,000 that was immediately paid. No other transactions occurred during the year so an average exchange rate is not necessary. Currency exchange rates were as follows:
Assume that Boerkian was a foreign subsidiary of a U.S. multinational company and the U.S. dollar is the functional currency. On the December 31, 2011 balance sheet, what was the remeasured value of the Land account?
Explanation / Answer
A Temporal Method is used for calculating Land i.e. rate of date of acquisition is used which is 1=$28 thus, remeasured value of land will be 72000×$28=$2016000