Home Inc. (a US company) has a wholly-owned subsidiary, S, which it acquired on 1 January X0. The balance sheets of S as at 1 January X0 and 31 December X0 are as set out in Figure 15.1 in foreign currency (FC) units:

The comprehensive income for the year to 31 December X0 is as set out in Figure 15.2

Translate the financial statements of S using

(a) the closing rate method (i.e. assuming that the functional currency of the subsidiary is that of the FC) and then

(b) temporal method (i.e. assuming that the subsidiary’s functional currency is the same as the $), given the following:

On 1 January 20X0, $1 = FC3.0 

On 30 June 20X0, $1 = FC2.5 

On 31 December 20X0, $1 = FC2.0

Transcribed Image Text:

Figure 15.1 Balance sheets for S as at 1.1.X0 and 31.12.X0 1.1. XO (FC units) Fixed assets 450 31.12. X 0 (FC units) 330 Inventory 240 360 Receivables 120 240 360 600 Payables 210 150 240 360 600 690 Ordinary share capital 600 600 Retained profits 90 600 690