Question

The following balance sheet accounts of a foreign entity have been translated into Canadian dollars at the following amounts under two different methods:

Closing Historical
Accounts receivable $ 254,000 $ 240,000
Investment in held-to-maturity bonds 142,000 120,000
Land 66,000 60,000
Patents 102,000 96,000
The foreign entity has the same functional currency as the parent. What total should appear on the balance sheet of this entity’s Canadian parent for these items?

Multiple Choice

$516,000

$540,000

$552,000

Answer 1

The total that should appear on the balance sheet of the Canadian parent for these items is $516,000.

Step-by-step explanation:

To calculate the total that should appear on the balance sheet of the Canadian parent, we need to determine the method of translation being used. The two methods mentioned are closing and historical. Under the closing method, the accounts receivable would be translated at $254,000, the investment in held-to-maturity bonds at $142,000, the land at $66,000, and the patents at $102,000, resulting in a total of $564,000. Under the historical method, the amounts would be translated at $240,000, $120,000, $60,000, and $96,000 respectively, resulting in a total of $516,000. Therefore, the correct answer is $516,000.