Topic: Advanced Financial Accounting

Question 1
A- Assume that an Italian corporation exports electronic equipment to USA in a transaction denominated in dollar. Is this transaction a foreign currency transaction? Is it a foreign transaction? Explain the difference between these two concepts and their application here.

B- “Exchange losses arise from foreign import activities, and exchange gains arise from foreign export activities.”. Discuss the accuracy of this statement and support your answer with a numerical example.

C- Penguin Corporation paid $16,200 for a 90% interest in Seagull Corporation on January 1, 2019, when Seagull stockholders’ equity consisted of $10,000 Capital Stock and $3,000 of Retained Earnings. The excess cost over book value was attributable to goodwill.

Additional information:

  1. All intercompany sales of inventory are made at 120% of cost. During 2019, Seagull ‘s sales to Penguin were $4,800, of which half of the merchandise remained in Penguin ‘s inventory at December 31, 2019. (The 2019 ending inventory was sold in 2020.) During 2020, Penguin’s sales to Seagull were $6,000 of which 60% remained in Seagull’s inventory at December 31, 2020. At year-end 2020, Seagull owed Penguin $1,500 for the inventory purchased during 2020.
  2. Penguin Corporation sold equipment with a book value of $2,000 and a remaining useful life of four years and no salvage value to Seagull Corporation on January 1, 2020 for $2,800. Straight-line depreciation is used.
  3. Separate company financial statements for Penguin Corporation and Subsidiary at December 31, 2020 are summarized in the first two columns of the consolidation working papers.

Type of services: Academic paper writing
Type of assignment: Essay
Subject: Accounting
Pages / words: 3/825
Number of sources: 0
Academic level: Junior(College 3rd year)
Paper format: MLA
Line Spacing: Double
Language style: US English

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