2-Assume that our subsidiary reports the following financial statements in Euros (€): Subsidiary (in €) Income statement: Sales 2,000,000 Cost of goods sold (1,200,000) Gross Profit 800,000 Operating expenses (410,000) Net income 390,000 Statement of retained earnings: BOY retained earnings 978,500 Net income 390,000 Dividends (39,000) Ending retained earnings 1,329,500 Balance sheet: Assets Cash 318,600 Accounts receivable 627,000 Inventory 508,800 PPE, net 1,607,700 Total Assets 3,058,100 Liabilities and Stockholders’ Equity Current Liabilities 323,400 Long-term Liabilities 635,200 Common Stock 120,000 APIC 650,000 Retained Earnings 1,329,500 Total Liabilities & Equity 3,058,100 Also assume the following exchange rates ($:€1): BOY Rate $1.40 EOY rate $1.46 Avg. rate $1.43 PPE purchase date rate $1.30 LTD borrowing date rate $1.20 Dividend rate $1.42 Historical rate (Common Stock and APIC) $0.90 Required: Translate the subsidiary’s income statement and balance sheet into $US using the current-rate method, assuming a BOY Retained Earnings balance of $985,750.
2-Assume that our subsidiary reports the following financial statements in Euros (€):
|
|
Subsidiary (in €) |
|
Income statement: |
|
|
Sales |
2,000,000 |
|
Cost of goods sold |
(1,200,000) |
|
Gross Profit |
800,000 |
|
Operating expenses |
(410,000) |
|
Net income |
390,000 |
|
|
|
|
Statement of |
|
|
BOY retained earnings |
978,500 |
|
Net income |
390,000 |
|
Dividends |
(39,000) |
|
Ending retained earnings |
1,329,500 |
|
|
|
|
|
|
|
Assets |
|
|
Cash |
318,600 |
|
|
627,000 |
|
Inventory |
508,800 |
|
PPE, net |
1,607,700 |
|
Total Assets |
3,058,100 |
|
|
|
|
Liabilities and |
|
|
Current Liabilities |
323,400 |
|
Long-term Liabilities |
635,200 |
|
Common Stock |
120,000 |
|
APIC |
650,000 |
|
Retained Earnings |
1,329,500 |
|
Total Liabilities & Equity |
3,058,100 |
Also assume the following exchange rates ($:€1):
|
BOY Rate |
$1.40 |
|
EOY rate |
$1.46 |
|
Avg. rate |
$1.43 |
|
PPE purchase date rate |
$1.30 |
|
LTD borrowing date rate |
$1.20 |
|
|
$1.42 |
|
Historical rate (Common Stock and APIC) |
$0.90 |
Required: Translate the subsidiary’s income statement and balance sheet into $US using the current-rate method, assuming a BOY Retained Earnings balance of $985,750.
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