Advanced Financial Accounting

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

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