D’Jais Corporation, a U.S. company, owns 100% of Bar A Corporation, a New Zealand company. Bar...

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D’Jais Corporation, a U.S. company, owns 100% of Bar ACorporation, a New Zealand company. Bar A's equipment was acquiredon the following dates (amounts are stated in New Zealanddollars):
Jan. 1, 2017 purchased equipment for 40,000 NZ dollars
Jul. 1, 2017 purchased equipment for 80,000 NZ dollars
Jan. 1, 2018 purchased equipment for 50,000 NZ dollars
Jul. 1, 2018 sold equipment purchased on Jan. 1, 2017 for 35,000NZ dollars
Exchange rates for the NZ dollar on various dates are:
Jan. 1,2017          $.500                          Jan. 1,2018          $.530
Jul. 1,2017          $.520                          Jul. 1,2018          $.505
Dec. 31, 2017      $.530                          Dec. 31, 2018        $.490
2017 avg. rate      $.515                          2018 avg. rate       $.510
Bar A's equipment has an estimated 5-year life with no salvagevalue and is depreciated using the straight-line method,calculating depreciation expense on a monthly basis. Bar A'sfunctional currency is the U.S. dollar, but the company uses the NZdollar for recordkeeping.
Required:
1. Determine the value of Bar A's equipment account on December31, 2018 in U.S. dollars.
2. Determine Bar A's depreciation expense for 2018 in U.S.dollars.
3. Determine the gain or loss from the sale of equipment on July1, 2018 in U.S. dollars.

Answer & Explanation Solved by verified expert

3.6 Ratings (313 Votes)

3 Gain or loss form sale of equipment Sale value NZ dollars 35000 Book value on 01 jan 2017 NZ 40000 Less depreciation NZ 4000060 months 18 months NZ 12000 So book value as on 01 jul 2018 NZ 28000 So profit in NZ 35000 28000 NZ 7000 so profit in US NZ 7000 See Answer

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D’Jais Corporation, a U.S. company, owns 100% of Bar ACorporation, a New Zealand company. Bar A's equipment was acquiredon the following dates (amounts are stated in New Zealanddollars):Jan. 1, 2017 purchased equipment for 40,000 NZ dollarsJul. 1, 2017 purchased equipment for 80,000 NZ dollarsJan. 1, 2018 purchased equipment for 50,000 NZ dollarsJul. 1, 2018 sold equipment purchased on Jan. 1, 2017 for 35,000NZ dollarsExchange rates for the NZ dollar on various dates are:Jan. 1,2017 $.500 Jan. 1,2018 $.530Jul. 1,2017 $.520 Jul. 1,2018 $.505Dec. 31, 2017 $.530 Dec. 31, 2018 $.4902017 avg. rate $.515 2018 avg. rate $.510Bar A's equipment has an estimated 5-year life with no salvagevalue and is depreciated using the straight-line method,calculating depreciation expense on a monthly basis. Bar A'sfunctional currency is the U.S. dollar, but the company uses the NZdollar for recordkeeping.Required:1. Determine the value of Bar A's equipment account on December31, 2018 in U.S. dollars.2. Determine Bar A's depreciation expense for 2018 in U.S.dollars.3. Determine the gain or loss from the sale of equipment on July1, 2018 in U.S. dollars.