This document contains an exam for an accounting course. It includes two problems involving currency exchange transactions between Australian and US dollars. Problem A provides background financial information for two companies, Pure Corporation and Sincere Company, and asks questions about goodwill and consolidated profit. Problem B gives exchange rate histories and futures rates, and asks how forward currency contracts would affect profit or loss for two sample transactions in 2015 and 2016. The exam tests understanding of currency hedging, consolidation of financial statements, and calculation of goodwill and profit under different accounting perspectives.
This document contains an exam for an accounting course. It includes two problems involving currency exchange transactions between Australian and US dollars. Problem A provides background financial information for two companies, Pure Corporation and Sincere Company, and asks questions about goodwill and consolidated profit. Problem B gives exchange rate histories and futures rates, and asks how forward currency contracts would affect profit or loss for two sample transactions in 2015 and 2016. The exam tests understanding of currency hedging, consolidation of financial statements, and calculation of goodwill and profit under different accounting perspectives.
This document contains an exam for an accounting course. It includes two problems involving currency exchange transactions between Australian and US dollars. Problem A provides background financial information for two companies, Pure Corporation and Sincere Company, and asks questions about goodwill and consolidated profit. Problem B gives exchange rate histories and futures rates, and asks how forward currency contracts would affect profit or loss for two sample transactions in 2015 and 2016. The exam tests understanding of currency hedging, consolidation of financial statements, and calculation of goodwill and profit under different accounting perspectives.
5 Name of student: _________________________________ Score: ______
Class Schedule: _________________________________ Date: ______
Problem A. Pure Corporation acquired an 80% interest in
Sincere Company on January 2, 2014 for P3,520,000. On this date, the share capital and retained earnings of the two 10 companies follow: Pure Corp. Sincere Co.
Share Capital P6,000,000 P2,250,000
Retained Earnings P3,000,000 P450,000 15 On January 2,2014, the assets and liabilities of Sincere Co. Were stated at their fair values except for machinery which is undervalued by P 225,000 (remaining life is 3 years). On September 30,2014, Sincere sold merchandise to Pure at an 20 inter-company profit of P 150,000; 25% was still unsold at year end. Likewise, on October 1, 2015, Sincere purchased merchandise from Pure for P 3,600,000. The selling affiliate included in a 20% mark-up on cost on this sale. Only 75% of these purchases had been sold to unrelated parties as of 25 December 3,2015. As of December 31, 2015, goodwill was determined to be impaired by P 60,000.
The following is the summary of the 2015 transactions of the
affiliated companies: 30 Pure Corp Sincere Co. Net Income P1,500,000 P600,000 Dividends declared and paid P600,000 P180,000
On the 2015 consolidated financial statements, how much
35 would be the: (1) Goodwill per consolidated financial statement (2) Goodwill per single financial statement of the acquirer (3) Goodwill per single financial statement of the target firm (4) Consolidated profit 40 (5) Net income attributable to the parents equity holders (6) Net income attributable Page 1 of 3to the minority controlling stake
2nd Semester Admission Year 2016 - 2017
K.T. Tegio Problem B. Given the following information for Australian dollars, compute for the following independent cases below: The agreement is 5 to exchange currencies of different countries on a specified future date at the specified rate. Option price is P20.60. The following direct exchange rates were as follows: 10/02/15 10/25/15 11/02/15 12/01/15 12/31/15 1/30/16 2/28/16 3/31/16 10 Buy 20.70 20.85 20.70 20.50 20.40 20.30 20.15 20.10 Sell 20.95 21.10 22.40 20.30 25.25 29.35 29.50 29.70
Transaction 1. On October 25, 2015 compact company ordered
merchandise worth $975,000 From a company in Sydney, payable on 25 February 28, 2016 in Australian $. It was shipped on November 2, 2015 to hedge this foreign currency exposure, compact company bought $975,000 on December 1, 2015 for delivery on January 30, 2016 under a forward contact with BDO. (7) What amount will affect profit or loss regarding the 30 transaction to sell on the financial statement in 2015 and 2016?
Transaction 2. On October 2, 2015, flash company received an order
of merchandise from a company in Brisbane. It was invoiced and 35 shipped on October 25, 2015 to the customer. The price of $370,000 is to be collected in Australian dollars on February 28, 2016. To hedge this foreign currency expose, Flash Company sold $370,000 for delivery on march 31, 2016 under a forward contract with BPI, which was entered into by flash company on November 2, 2015. 40 (8) What amountPage will2 of affect 3 profit or loss regarding the transaction to sell on the financial statement in 2015 and 2016? (9) Bonus (10) Bonus