Question;51. Briefly explain the following terms associated;with accounting for foreign entities;a) Functional Currency;b) Translation;c) Remeasurement;52. On January 1, 2008, Pace Company acquired all of;the outstanding stock of Spin PLC, a British Company, for $350,000. Spin's net;assets on the date of acquisition were 250,000 pounds (?). On January 1, 2008;the book and fair values of the Spin's identifiable assets and liabilities;approximated their fair values except for property, plant, and equipment and;trademarks. The fair value of Spin's property, plant, and equipment exceeded;its book value by $25,000. The remaining useful life of Spin's equipment at;January 1, 2008, was 10 years. The remainder of the differential was;attributable to a trademark having an estimated useful life of 5 years. Spin's;trial balance on December 31, 2008, in pounds, follows;Additional Information;1 Spin uses the FIFO method for its inventory. The beginning inventory was;acquired on December 31, 2007, and ending inventory was acquired on December;26, 2008. Purchases of ?300,000 were made evenly throughout 2008.;2 Spin acquired all of its property, plant, and equipment on March 1, 2006, and;uses straight-line depreciation.;3 Spin's sales were made evenly throughout 2008, and its operating expenses;were incurred evenly throughout 2008.;4 The dividends were declared and paid on November 1, 2008.;5 Pace's income from its own operations was $150,000 for 2008, and its total;stockholders' equity on January 1, 2008, was $1,000,000. Pace declared $50,000;of dividends during 2008.;6 Exchange rates were as follows;53. Use the information given in question 52 to;prepare a schedule providing a proof of the translation adjustment.;54. Refer to the information in question 52. Assume;the U.S. dollar is the functional currency, not the pound.;55. Refer to the information in question 52. Assume;the U.S. dollar is the functional currency, not the pound. Prepare a schedule;providing a proof of the remeasurement gain or loss. Assume that the British;subsidiary had the following monetary assets and liabilities at January 1;2008;56. Parisian Co. is a French company located in Paris.;Yankee Corp., located in New York City, acquires Parisian Co. Parisian has the;Euro as its local currency and the Swiss Franc as its functional currency.;Yankee has the U.S. dollar as its local currency and the U.S. dollar as its;functional currency.
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