3-Assume that our subsidiary reports the following financial statements in Euros (€): Subsidiary (in €) Income statement: Sales 2,030,000 Cost of goods sold (960,000) Gross Profit 1,070,000 Operating expenses (543,000) Net income 527,000 Statement of retained earnings: BOY retained earnings 2,080,700 Net income 527,000 Dividends (63,000) Ending retained earnings 2,544,700 Balance sheet: Assets Cash 405,200 Accounts receivable 809,500 Inventory 425,000 PPE, net 2,780,000 Total Assets 4,500,700 Liabilities and Stockholders’ Equity Current Liabilities 280,900 Long-term Liabilities 645,300 Common Stock 130,000 APIC 899,800 Retained Earnings 2,544,700 Total Liabilities & Equity 4,500,700
3-Assume that our subsidiary reports the following financial statements in Euros (€):
|
|
Subsidiary (in €) |
|
Income statement: |
|
|
Sales |
2,030,000 |
|
Cost of goods sold |
(960,000) |
|
Gross Profit |
1,070,000 |
|
Operating expenses |
(543,000) |
|
Net income |
527,000 |
|
|
|
|
Statement of |
|
|
BOY retained earnings |
2,080,700 |
|
Net income |
527,000 |
|
Dividends |
(63,000) |
|
Ending retained earnings |
2,544,700 |
|
|
|
|
|
|
|
Assets |
|
|
Cash |
405,200 |
|
|
809,500 |
|
Inventory |
425,000 |
|
PPE, net |
2,780,000 |
|
Total Assets |
4,500,700 |
|
|
|
|
Liabilities and |
|
|
Current Liabilities |
280,900 |
|
Long-term Liabilities |
645,300 |
|
Common Stock |
130,000 |
|
APIC |
899,800 |
|
Retained Earnings |
2,544,700 |
|
Total Liabilities & Equity |
4,500,700 |
Also assume the following exchange rates ($:€1):
|
BOY Rate |
$1.20 |
|
EOY rate |
$1.26 |
|
Avg. rate |
$1.23 |
|
PPE purchase date rate |
$1.22 |
|
LTD borrowing date rate |
$1.27 |
|
|
$1.26 |
|
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 $2,120,300.
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