Ginvold Co

question 31

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 balance sheet for this subsidiary in stickles and then translate the amounts into U.S. dollars.

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Definitions:

Cultural Knowledge

A vast store of information, accumulated within a culture, that explains how the world works and why things happen as they do.

Cultural Knowledge

Understanding and awareness of the customs, values, and social norms of a particular group or society.

Scientific Method

A systematic and logical approach to discovering how things in the universe work, involving observation, hypothesis formation, experimentation, and conclusion.

Consistent Preferences

A situation where an individual's choices or tastes remain stable over time, showing a reliable pattern of preference.