Assignment 4: Final Project

Roberts Corporation and William Company (Continuing
Project)

Part I

On August 1, 2008, William signed a noncancelable order to
purchase a machine from a company located in Japan. The contracted price was
6,000,000 yen, payable on January 31, 2009. The machine will be delivered to
William on November 1, 2008.

In order to hedge against a strengthening of the yen, William
entered into a forward exchange contract on August 1, 2008, to purchase
6,000,000 yen on January 31, 2009.

On November 1, 2008, the transaction date, the U.S. company
received the machine from the Japanese company. Spot and forward exchange rates
on various dates follow:

Prepare all journal entries in Microsoft Excel for William that
pertain to the acquisition of the machine and the forward exchange contract.
Assume a December 31
year-end.

Submit your excel sheet to the W4: Assignment 4
Dropbox by
Friday, November 1, 2013.

Name your document: SU_MBA6302_W4_A4_LastName_FirstInitial.xls.

Part II

As the international aspects of William’s business continue to
expand, William purchases a controlling interest in Parisian Co., a French
company located in Paris. Parisian has the euro as its local currency.

Your manager is vaguely aware that the designation of the
functional currency for Parisian may have significant and potentially different
consequences for the consolidated financial statements of the parent company and
its foreign subsidiaries. Being mindful of the bottom line, your manager makes
it clear to you that he or she would strongly prefer that you choose the
functional currency which would be likely to have the most favorable (or least
negative) potential impact on consolidated net income.

Draft a one- to two-page memorandum in Microsoft Word document in
response to your manager’s concerns. Address the following specific points:

• In which currency will the year-end consolidated financial statements be
  prepared?
• Will the financial statements be translated or remeasured? How will you
  determine this? Explain the rationale for your answer.
• How would an asset such as Buildings be accounted for using each method
  (translation vs. remeasurement)?

Provide succinct but complete communication and avoid the use of
accounting jargon given the nature of the audience.

Cite any sources you use using the correct APA format on a
separate page.