Ginvold Co

question 39

Essay

Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2013 by acquiring all of the common stock for §50,000 Stickles, the local currency. This subsidiary immediately borrowed §120,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2014. A building was then purchased for §170,000 on January 1, 2013. This property had a ten-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for three years to a group of local doctors for §6,000 per month. By year-end, payments totaling §60,000 had been received. On October 1, §5,000 were paid for a repair made on that date and it was the only transaction of this kind for the year. A cash dividend of §6,000 was transferred back to Ginvold on December 31, 2013. The functional currency for the subsidiary was the Stickle (§). Currency exchange rates were as follows:
Prepare a statement of cash flows for this subsidiary in stickles and then translate the amounts into U.S. dollars.

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Definitions:

Monetary Awards

Financial rewards given to employees or organizations as recognition for achievements or meeting particular standards.

First-Year Savings

The amount of money saved during the first year of implementing a particular strategy, policy, or change.

Preventive Discipline

A proactive approach to discipline that focuses on identifying and addressing issues before they escalate into serious problems.

Infraction

A violation or infringement of a rule, agreement, or law.