Assume that your company owns a subsidiary operating in France. The subsidiary conducts most of its business activities in the European Economic Union and maintains its books in the Euro as its functional currency. The subsidiary's financial statements in for the most recent year follow in part a below:
The relevant exchange rates $: are as follows:
BOY rate$EOY rate$Avg. rate$PPE purchase date rate$LTD borrowing date rate$Dividend rate$Historical rate common stock and APIC$
Forboth parts a and b below,use a negative sign with answers to indicate areduction
a Translate the subsidiarys income statement, statement of retained earnings, balance sheet, and statement of cash flows into $US assume that the BOY Retained Earnings is $
Note: Enter In US Dollars" answers rounded to the nearest whole number.
Income Statement:
In EurosTranslation
RateIn
US DollarsSalesAnswer
Answer
Cost of goods soldAnswer
Answer
Gross profitAnswer
Operating expensesAnswer
Answer
Net incomeAnswer
Statement of Retained Earnings:BOY retained earningsAnswer
Net incomeAnswer
DividendsAnswer
Answer
EOY retained earningsAnswer
Balance Sheet:AssetsCashAnswer
Answer
Accounts receivableAnswer
Answer
InventoryAnswer
Answer
Property, plant, and equipment PPE netAnswer
Answer
Total assetsAnswer
Liabilities and stockholders' equityCurrent liabilitiesAnswer
Answer
Longterm liabilitiesAnswer
Answer
Common stockAnswer
Answer
APICAnswer
Answer
Retained earningsAnswer
Answer Cumulative translation adjustmentEffect of exchange rate on cashAnswer
Total liabilities and equityAnswer
Statement of Cash Flows:Net incomeAnswer
Answer
Change in accounts receivableAnswer
Answer
Change in inventoriesAnswer
Answer
Change in current liabilitiesAnswer
Answer
Net cash from operating activitiesAnswer
Change in PPE, netAnswer
Answer
Net cash from investing activitiesAnswer
Change in longterm debtAnswer
Answer
DividendsAnswer
Answer
Net cash flows from financing activitiesAnswer
Net change in cashAnswer
Effect of exchange rate on cashAnswer
Beginning cashAnswer
Answer
Ending cashAnswer
Answer
b Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $
Direct computation of translation adjustment:Answer BOY cumulative translation adjustmentBOY net assets x EOY BOY exchange ratesBOY net assets x BOY exchange rateNet income x EOY Average exchange rateNet income x average exchange rateDividends x EOY Dividend exchange rateDividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the yearAnswer
Net income x EOY Average exchange rateAnswer
Answer BOY cumulative translation adjustmentBOY net assets x EOY BOY exchange ratesBOY net assets x BOY exchange rateNet income x EOY Average exchange rateNet income x average exchange rateDividends x EOY Dividend exchange rateDividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the yearAnswer
Answer
Answer BOY cumulative translation adjustmentBOY net assets x EOY BOY exchange ratesBOY net assets x BOY exchange rateNet income x EOY Average exchange rateNet income x average exchange rateDividends x EOY Dividend exchange rateDividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the yearAnswer
EOY cumulative translation adjustmentAnswer
