College of Administrative & Financial Sciences

2nd, SY2021-2022
BSIB622 – INTERNATIONAL ACCOUNTING
FA 2

NAME: ________________________________ ID NO. __________________

PART I. PROBLEM-SOLVING

DIRECTION: Read the cases, analyse and answer the requirements.

1. Unicorn Gases (U.S. Company) owns Pryce Gases, Inc. a subsidiary in Italy, which was established December
31,2018. Pryce immediately purchased inventory for 600,000 Euros
Phoenix Inc. balance sheet items as of 12/31/2018, in Euros:
Cash 400,000 Capital stock 1,000,000
Inventory 600,000
Italia Inc.
Income Statement
December 31, 2019
(in Euros)
Sales 8,000,000
Less: Costs of Goods Sold 6,000,000
Gross Profit 2,000,000
Selling and Administrative Exp. 500,000
Depreciation Expenses 200,000
Interest Expense 180,000
Income before Income Tax 1,100,000
Income Tax 275,000
Net Income 825,000

Prepared by : Reviewed / Checked: Approved by:

DR. MA. CECILIA LAGARAS DR. JAYENDIRA SANKAR DR. VINODH NATARAJAN
Course Coordinator Dept. Head, BSIB Associate Dean

Date: Date: : Date: :

 College of Administrative & Financial Sciences
2nd, SY2021-2022
BSIB622 – INTERNATIONAL ACCOUNTING
FA 2

Italia Inc.
Balance Statement
December 31, 2019
(in Euros)
ASSETS
Cash 550,000
Accounts Receivable 600,000
Inventory (FIFO) 800,000
Property, Plant and Equipment 2,000,000
Accum. Depreciation (200,000) 1,800,000
Patents 80,000
Total Assets 3,830,000
LIABILITIES & EQUITY
Accounts Payable 330,000
Long-term Debts 2,000,000
Capital Stock 1,000,000
Retained Earnings 500,000
Total Liabilities & Equity 3,830,000

Phoenix Inc.
Statement of Retained Earnings
December 31, 2019
(in Euros)

 Retained Earnings 1/1/2019 0

 Net Income, Dec. 31, 2019 825,000
 Less: Dividends 12/1/2019 (325,000)
 Retained Earnings 12/31/2019 500,000
Relevant exchange rates
 January 1, 2019 $2.50 = 1 euro
 Rate when PPE and LT debt incurred $2.40 = 1 euro
 Rate when Patent acquired $2.35 = 1 euro
 Average exchange rate Year 2019 $2.45 = 1 euro
 Rate 12/1/2019 when dividends declared $2.27 = 1 euro
 Average exchange rate December 2019 $2.25 = 1 euro
 December 31, 2019 $2.30 = 1 euro
Requirement:
Prepared by : Reviewed / Checked: Approved by:

DR. MA. CECILIA LAGARAS DR. JAYENDIRA SANKAR DR. VINODH NATARAJAN
Course Coordinator Dept. Head, BSIB Associate Dean

Date: Date: : Date: :

 College of Administrative & Financial Sciences
2nd, SY2021-2022
BSIB622 – INTERNATIONAL ACCOUNTING
FA 2
1. Using the given data and financial statement template, translate the financial statements using current rate
method.

ITALIA
INCOME STATEMENT
DECEMBER 31, Year 1
(in Euro) Exchange Rate (in Dollar Amt)
Sales 8,000,000
Cost of Goods Sold 6,000,000 (1)
Gross Profit 2,000,000 (2)
Selling and Adm. Exp. 500,000 (3)
Depreciation Expense 200,000 (4)
Amortization Expense 20,000 (5)
Interest Expense 180,000 (6)
Income b4 Income Tax 1,100,000 (7)
Income Tax 275,000 (8)
Net Income 825,000 (9)

ITALIA, INC      
RETAINED EARNINGS
DECEMBER 31, 2019    
  (in Euro)  Exchange Rate (In US $)
Retained Earnings 1/1/2019 0 (10)
Net Income 825,000 (11)
Less: Dividends 12/1/2019 (325,000) (12)
Retained Earnings,12/31/2019 500,000 (13)

Prepared by : Reviewed / Checked: Approved by:

DR. MA. CECILIA LAGARAS DR. JAYENDIRA SANKAR DR. VINODH NATARAJAN
Course Coordinator Dept. Head, BSIB Associate Dean

Date: Date: : Date: :

 College of Administrative & Financial Sciences
2nd, SY2021-2022
BSIB622 – INTERNATIONAL ACCOUNTING
FA 2

ITALIA      
BALANCE SHEET
DECEMBER 31, Year 1      
  (in Euro) Exchange Rate (In US $)
Cash 550,000 (14)
Accts Receivable 600,000 (15)
Inventory (FIFO) 800,000 (16)
PPE 2,000,000 (17)
Accum. Deprn- PPE (200,000) (18)
Patents 80,000 (19)
Total Assets 3,830,000 (20)
Liabilities & Equity  
Accounts Payable 330,000 (21)
Long-term Debts 2,000,000 (22)

Capital Stocks 1,000,000 (23)

Retained Earnings 500,000 (24)
Liab. & Equity 3,830,000 (25)
Translation Adjustment (26)
Liabilities & Equity  3,830,000   (27)

Prepared by : Reviewed / Checked: Approved by:

DR. MA. CECILIA LAGARAS DR. JAYENDIRA SANKAR DR. VINODH NATARAJAN
Course Coordinator Dept. Head, BSIB Associate Dean

Date: Date: : Date: :