Advanced Financial Accounting
College of Administration and Finance Sciences Assignment (2) Deadline: May 4, 2024 @ 23:59 Course Name: Advanced Financial Student’s Name: SEU ELITE Accounting Course Code: ACCT 302 Student’s ID Number: Semester: Second Semester CRN: 24922 Academic Year: 1445 H For Instructor’s Use only Instructor’s Name: 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 SEU ELITE 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. Loan Payable 1000 Loan Receivable 1000 Interest Revenue -Parent Interest Expense (sub) 50 50 b. Sales 500 COGS 500 c. Sales 800 COGS 300 Inventory 500 Q2. Explain the differences between translation and remeasurement of financial statements of a foreign subsidiary. Answer: Translation and remeasurement are relevant in case the parent company has subsidiaries in foreign country. These two terms are used regarding the conversion of the currency of the country in which the subsidiary is located. 2 SEU ELITE College of Administration and Finance Sciences Translation: is used to convert the functional currency of the subsidiary into the reporting currency of the parent company. Translation converts the items of financial statements of the subsidiary using current rate method. Remeasurement: is used to convert the foreign currency into the functional currency of the subsidiary. Remeasurement converts the items of financial statements of the subsidiary using temporal method. Adjustments relating to translation are done by adjusting stockholders’ equity. 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 A popular reason for forming a partnership is to operate a business, though there are other reasons as well. In order to accomplish a shared objective, partners might pool their resources, talents, and experience. Interest on average capital balance for person I is calculated as follows: Interest on average capital balance – Average capital investment * interest rate = 300,000 × 5% = 15,000 3 SEU ELITE College of Administration and Finance Sciences Interest on average capital balance for person R is calculated as follows: Interest on average capital balance – Average capital investment * interest rate = 150,000× 5% = 7,500 Balance of profit for persons I and R is calculated as follows: Balance of profit = Net Income – Total Salary allowance – Total interest on capital 300,000 – 65,000 – 22,500 = 212,500 The share of profit for persons I is calculated as follows: Share of person I – Total balance * share of i/ total share = 212,500 x = 159,375 The share of profit for persons R is calculated as follows: Share of person R – Total balance * share of i/total share = 212,500 x = 53,125 I R Total Salary allowances 50,000 15,000 65,000 Interest on average capital balance 15,000 7,500 22,500 Balance of profit 159,375 53,125 212,500 224,375 75,625 300,000 Particulars 4 SEU ELITE College of Administration and Finance Sciences The journal entries to allocate the profit between Peron I and R is prepared as follows: Account Dr Income summary Cr 300,000 I’s capital 224,375 R’s capital 75,625 5 SEU ELITE
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
