You must follow all instructions in the assignment file
The solution model is attached. The solution must be identical to the model. Please pay attention. I Repeat again the solution for the first and third questions. It must be completely identical to the model solution, except the second question. The solution must be different.
Required Texts
Baker, R., Christensen, T., & Cottrell, D. (2012). Essentials of advanced financial accounting (1st ed.). New York, NY: McGraw-Hill/Irwin. ISBNs: 9780078025648 (print); 9780077505240 (e-copy).
College of Administration and Finance Sciences
Assignment (2)
Deadline: May 4, 2024 @ 23:59
Course Name: Advanced Financial
Student’s Name:
Accounting
Course Code: ACCT 302
Student’s ID Number:
Semester: Second Semester
CRN:
Academic Year: 1445 H
For Instructor’s Use only
Instructor’s Name: Rabab farrash
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
•
Assignments submitted through email will not be accepted.
•
Students are advised to make their work clear and well presented, marks may be reduced for
poor presentation. This includes filling your information on the cover page.
•
Students must mention question number clearly in their answer.
•
Late submission will NOT be accepted.
•
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
•
All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures
containing text will be accepted and will be considered plagiarism.
•
Submissions without this cover page will NOT be accepted.
1
College of Administration and Finance Sciences
Assignment Question(s):
Three Questions Each Carries 5 Marks) (total Marks 15)
Q1. The following information extracted from the parent company
a. Parent company loaned $1000 to Subsidiary with an interest rate of 5%.
b. Parent company made a sale to Subsidiary for $500 cash. The inventory had originally cost
Parent company $200. Subsidiary then sold that same inventory to an outsider for $700.
c. Parent company made a sale to Sub for $800 cash. The inventory had originally cost Parent
$300. Subsidiary has not yet sold that same inventory to an outsider.
Required:
Pass the elimination entries for the intercompany transactions.
Answer:
a- Eliminate the intercompany loans (1000 * 5 %) + 1000
Accounts
Dr
Loan payable
1050
Cr
Loan receivables
1050
b- Eliminate sales from parent to subsidiary to outsider
Accounts
Dr
Sales
500
COGS
Cr
500
c- Eliminate sales from parent to subsidiary not yet to outsider
Accounts
Dr
Sales
800
Cr
COGS
300
Inventory (Unrealized profit)
500
2
College of Administration and Finance Sciences
Q2. Explain the differences between translation and remeasurement of financial statements of a foreign
subsidiary.
Answer:
translation
•
The
translation
of
the
remeasurement
foreign
entity’s •
The remeasurement of the foreign entity’s
functional currency statements into U.S.
statements into the functional currency of
dollars.
the entity
•
Translation is the most common method used.
•
Applied when the local currency is the foreign
foreign entity’s financial statements from
entity’s functional currency.
the local currency that the entity used into
Current rate is used to convert the local
the foreign entity’s functional currency.
currency balance sheet account balances into •
Required
U.S. dollars.
currency is different from the currency
Any translation adjustment that occurs is a
used to maintain the books and records of
component of comprehensive income
the foreign entity.
Revenues and expenses are translated using the •
The method used is called the temporal
average rate for the reporting period.
method
•
•
•
•
This method is called the current rate method
3
•
Remeasurement is the restatement of the
only
when
the
functional
College of Administration and Finance Sciences
Q3. The partnership of Ibrahim and Rawan has the following provisions:
•
Ibrahim and Rawan receive salary allowances of SAR 50,000 and SAR 15,000, respectively.
•
Interest is imputed at 5% on the average capital investment.
•
Any remaining profit or loss is shared between Ibrahim and Rawan in a 3:1 ratio, respectively.
•
Average Capital investments: Ibrahim, SAR 300,000; Rawan, SAR 150, 000
•
Net income SAR 300,000
Required: pass journal entry to allocate the profit between Ibrahim and Rawan
Answers:
a- Allocation schedule:
Ibrahim
Rawan
Net income
Total
300,000
Salary
50,000
15,000
(65,000)
Interest to capital
5% × 300,000 = 15,000
5 % × 150,000 = 7500
(22,500)
Residual profit
212,500
Allocate profit
75% × 212500 = 159,375 25 % × 212500 = 53125 (212,500)
Total
224375
75625
b- Journal entry:
Accounts
Dr
Cr
Income summary 300,000
Capital, Ibrahim
224,375
Capital, Rawan
75,625
With my best wishes:
4
0
College of Administration and Finance Sciences
Assignment (2)
Deadline: May 4, 2024 @ 23:59
Course Name: Advanced Financial
Student’s Name:
Accounting
Course Code: ACCT 302
Student’s ID Number:
Semester: Second Semester
CRN:
Academic Year: 1445 H
For Instructor’s Use only
Instructor’s Name: Dr. Salah Oraby
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
•
Assignments submitted through email will not be accepted.
•
Students are advised to make their work clear and well presented, marks may be reduced for
poor presentation. This includes filling your information on the cover page.
•
Students must mention question number clearly in their answer.
•
Late submission will NOT be accepted.
•
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
•
All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures
containing text will be accepted and will be considered plagiarism.
•
Submissions without this cover page will NOT be accepted.
1
College of Administration and Finance Sciences
Assignment Question(s):
Three Questions Each Carries 5 Marks) (total Marks 15)
Q1. The following information extracted from the parent company
a. Parent company loaned $1000 to Subsidiary with an interest rate of 5%.
b. Parent company made a sale to Subsidiary for $500 cash. The inventory had originally cost
Parent company $200. Subsidiary then sold that same inventory to an outsider for $700.
c. Parent company made a sale to Sub for $800 cash. The inventory had originally cost Parent
$300. Subsidiary has not yet sold that same inventory to an outsider.
Required:
Pass the elimination entries for the intercompany transactions.
Answer:
Q2. Explain the differences between translation and remeasurement of financial statements of a foreign
subsidiary.
Answer:
Q3. The partnership of Ibrahim and Rawan has the following provisions:
•
Ibrahim and Rawan receive salary allowances of SAR 50,000 and SAR 15,000, respectively.
•
Interest is imputed at 5% on the average capital investment.
•
Any remaining profit or loss is shared between Ibrahim and Rawan in a 3:1 ratio, respectively.
•
Average Capital investments: Ibrahim, SAR 300,000; Rawan, SAR 150, 000
•
Net income SAR 300,000
Required: pass journal entry to allocate the profit between Ibrahim and Rawan
2
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