Accounting Question

Assignment Question(s): Three Questions Each Carries 5 Marks) (total Marks 15)

Q1. The following information extracted from the parent company

  • Parent company loaned $1000 to Subsidiary with an interest rate of 5%.
  • 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.
  • 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