QUESTION 1Francis Limited is finalizing its accounts for the yearended December 31, 2017 before the finalization ofaccount the following events came to the knowledge ofthe finance director.1. The company owns a subsidiary in a foreign country.The government of that has communicated to thecompany on December 28, 2017 that it will expropriateassets of the subsidiary. The book value of theinvestment in the subsidiary at the year-end was GHS50 million and fair market value GHS 75 million. Theforeign government has indicated that they willcompensate the company only to the extent of 25% ofthe fair value of the investment in the subsidiary.2. A damages claim of GHS 2 million has been filledagainst the company for the breach of contract. Thecompany's lawyer is of the viewpoint that it is probablethat the damages will be awarded to the plaintiff. It isnot possible to reasonably estimate the amount ofdamages, at the year end. However, before theauthorization of financialconfirmed the claim at GHS. 500,000.3. There was a fire at one of the warehouse of thestatementsthecourtcompany in January 5, 2018 stocks worth GHS 12million were completely destroyed. The companystocks were under insurance to the extent of 25% ofvalue.4. The company has discontinued one of his businesslocations on November 30, 2017 and has been planningto shift affected employees to other business locations.The relocation cost estimated at the year end is GHS.1.5 million.5. One of the customer of the company has burnthimself during use of a product manufactured by SaraLimited just after the year end. The company hasdecided to resolve the matter out of court by payingdamages of GHS 1 million. The company has nevercreated any provision regarding such damages as thisevent has never occurred in the past.REQUIRED: Show how each of the above events willbe dealt in the financial statement of the company fortheyear ended December 31, 2017.

Financial statements refers to those statements of a company which depicts the business activities…

Francis Limited is finalizing its accounts for the year ended December 31, 2017 before the finalization of account the following events came to the knowledge of the finance director. 1. The company owns a subsidiary in a foreign country. The government of that has communicated to the company on December 28, 2017 that it will expropriate assets of the subsidiary. The book value of the investment in the subsidiary at the year-end was GHS 50 million and fair market value GHS 75 million. The

Francis Limited is finalizing its accounts for the year ended December 31, 2017 before the finalization of account the following events came to the knowledge of the finance director. 1. The company owns a subsidiary in a foreign country. The government of that has communicated to the company on December 28, 2017 that it will expropriate assets of the subsidiary. The book value of the investment in the subsidiary at the year-end was GHS 50 million and fair market value GHS 75 million. The

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter11: Stockholders' Equity

Section: Chapter Questions

Problem 11.15E

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Darron Co. was formed on January 1, 2018 as a wholly-owned foreign subsidiary of a U.S. corporation. Darron's functional currency was the stickle (§). The following transactions and events occurred during 2018:Jan. 1 Darron issued common stock for §1,000,000.June 30 Darron paid dividends of §20,000.Dec. 31 Darron reported net income of §80,000 for the year. exchange rates for 2018 were: Jan.1 June 30 Dec.31 Weighted average rate for the year § 1 = $ 0.48§ 1 = $ 0.46§ 1 = $ 0.42§ 1 = $ 0.44 What exchange rate should have been used in translating Darron's revenues and expenses for 2018?
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