Direct foreign exchange rates in U.S. dollars
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I need help completing the following exercises. I am going crazy looking for examples, etc. Please help me. Attached are the exercises. Thank you.
Exercises:
1. On January 1, 20X9, Long Corporation purchased 60 percent of Shortway Company's common
stock and recorded the following entry:
Investment in Shortway Co. Stock 327,000
Cash 327,000
The book values and fair values of the balance sheet items reported by Shortway at January 1, 20X9, are as follows:
2. Verry Corporation owns 75 percent of Spawn Corporation's voting common stock. Verry
reported income from its separate operations of $90,000 and $110,000 in 20X4 and
20X5, respectively. Spawn reported net income of $60,000 and $40,000 in 20X4 & 20X5,
respectively.
Required:
a. Compute consolidated net income for 20X4 and 20X5 if Verry sold land with a book value of $95,000 to Spawn for $120,000 on June 30, 20X4.
b. Compute consolidated net income for 20X4 and 20X5 if Spawn sold land with a book
value of $95,000 to Verry for $120,000 on June 30, 20X4.
3. Suppose the direct foreign exchange rates in U.S. dollars are:
1 British pound = $1.60
1 Canadian dollar = $.74
Required:
a. What are the indirect exchange rates for the British pound and the Canadian dollar?
b. How many pounds must a British company pay to purchase goods costing $8,000 from a U.S. company?
c. How many U.S. dollars must be paid for a purchase costing 4,000 Canadian dollars?
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Solution Summary
The direct foreign exchange rates in the United States dollars are examined.
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ANSWERS
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PROBLEM
Exercises:
1. On January 1, 20X9, Long Corporation purchased 60 percent of Shortway Company's common
stock and recorded the following entry:
Investment in Shortway Co. Stock 327,000
Cash 327,000
The book values and fair values of the balance ...
Purchase this Solution
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