Pasquale Company is a manufacturer of oil drilling equipment located in Canada. The company is 90% owned by a U.S. parent company. The accounting department of Pasquale Company accumulated the following 2008 information for the company’s auditor.Equipment:1. The equipment account contained the following items:2. Pasquale Company depreciates assets by the straight-line method and assumes a zero residual value.3. Its policy is to take a full year’s depreciation on all depreciable assets acquired before July 1 and no depreciation on all depreciable assets required after July 1.Inventory: 1. The beginning inventory of 60,000 Canadian dollars was acquired during the last quarter of 2007.2. Inventory purchases of 400,000 Canadian dollars were made uniformly during the year.3. The ending inventory of 60,000 Canadian dollars was acquired during November and December, 2008.Marketable Securities:1. Marketable securities, carried at cost, were acquired for 30,000 Canadian dollars when the direct exchange rate was $.9320.Direct Exchange Rates:Average for the last quarter of 2007, …… $.7322January 1, 2008,…………… $.7080Average for November and December, 2008… , $.6845Average for 2008,………….. $.7140December 31, 2008,…………. $.6960Required:A. Compute the account balances that would be reported for equipment, inventory, and marketable securities in the December 31, 2008, balance sheet expressed in U.S. dollars, assuming that the temporal method was used to translate the accounts.B. Compute the depreciation expense and cost of goods sold for 2008 in U.S. dollars, assuming that the temporal method was used to translate the accounts.C. Repeat requirements A and B, assuming that the current rate method was used to translate the accounts.D. Contrast the effects on income from using the current rate method and the temporal method to translate cost of goods sold and depreciation expense. Explain why net income is increased or decreased when the accounts were translated using the current ratemethod.
Pasquale Company is a manufacturer of oil drilling equipment located
Armstrong Helmet Company manufactures a unique model of bicycle helmet Question Case project Learning Objectives: Prepare practical applications of course concepts Develop analytical and critical thinking Develop decision-making capabilities Enhance professional...