Asked by HANNAH MARTE on Jun 27, 2024
Verified
Required:
Assume that WBC's functional currency is the euro. Calculate the translated Canadian dollar balances for the following accounts for December 31, 20X7.
a. Equipment
b. Accumulated depreciation-equipment
c. Depreciation expense
d. Goodwill
Straight-Line Basis
A method of calculating depreciation and amortization that allocates an equal amount of the asset's cost to each year of its useful life.
Functional Currency
The primary currency of the primary economic environment in which an entity operates, used in its financial reporting.
- Determine the financial outcomes from translation in terms of gains or losses through the application of the current-rate technique and the temporal strategy.
- Specify the appropriate exchange rates applicable to multiple accounts via different translation strategies.
Verified Answer
ZK
Zybrea KnightJul 02, 2024
Final Answer :
If the functional currency of WBC is the euro, then the balances are translated at the current rate on December 31, 20X7.
a. Equipment (€425,000 ×1.62)$688,500 b. Accumulated depreciation 1st purchase (€250,000/5×3×1.62)$243,000 2nd purchase (€175,000/5×2×1.62)113,400 Total $356,400c. Depreciation expense [(€250,000/5+€175,000/5)×1.58]$134,300 d. Goodwill ((€375,000×1.62)$607,500\begin{array} { | l | r | } \hline \text { a. Equipment (€425,000 } \times 1.62 ) & \$ 688,500 \\\hline \text { b. Accumulated depreciation } & \\\hline \text { 1st purchase } ( € 250,000 / 5 \times 3 \times 1.62 ) & \$ 243,000 \\\hline \text { 2nd purchase } ( € 175,000 / 5 \times 2 \times 1.62 ) & 113,400 \\\hline \text { Total } & \$ 356,400 \\\hline & \\\hline \text {c. Depreciation expense } & \\\hline [ ( € 250,000 / 5 + € 175,000 / 5 ) \times 1.58 ] & \$ 134,300 \\\hline \text { d. Goodwill } ( ( € 375,000 \times 1.62 ) & \$ 607,500 \\\hline\end{array} a. Equipment (€425,000 ×1.62) b. Accumulated depreciation 1st purchase (€250,000/5×3×1.62) 2nd purchase (€175,000/5×2×1.62) Total c. Depreciation expense [(€250,000/5+€175,000/5)×1.58] d. Goodwill ((€375,000×1.62)$688,500$243,000113,400$356,400$134,300$607,500
a. Equipment (€425,000 ×1.62)$688,500 b. Accumulated depreciation 1st purchase (€250,000/5×3×1.62)$243,000 2nd purchase (€175,000/5×2×1.62)113,400 Total $356,400c. Depreciation expense [(€250,000/5+€175,000/5)×1.58]$134,300 d. Goodwill ((€375,000×1.62)$607,500\begin{array} { | l | r | } \hline \text { a. Equipment (€425,000 } \times 1.62 ) & \$ 688,500 \\\hline \text { b. Accumulated depreciation } & \\\hline \text { 1st purchase } ( € 250,000 / 5 \times 3 \times 1.62 ) & \$ 243,000 \\\hline \text { 2nd purchase } ( € 175,000 / 5 \times 2 \times 1.62 ) & 113,400 \\\hline \text { Total } & \$ 356,400 \\\hline & \\\hline \text {c. Depreciation expense } & \\\hline [ ( € 250,000 / 5 + € 175,000 / 5 ) \times 1.58 ] & \$ 134,300 \\\hline \text { d. Goodwill } ( ( € 375,000 \times 1.62 ) & \$ 607,500 \\\hline\end{array} a. Equipment (€425,000 ×1.62) b. Accumulated depreciation 1st purchase (€250,000/5×3×1.62) 2nd purchase (€175,000/5×2×1.62) Total c. Depreciation expense [(€250,000/5+€175,000/5)×1.58] d. Goodwill ((€375,000×1.62)$688,500$243,000113,400$356,400$134,300$607,500
Learning Objectives
- Determine the financial outcomes from translation in terms of gains or losses through the application of the current-rate technique and the temporal strategy.
- Specify the appropriate exchange rates applicable to multiple accounts via different translation strategies.
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