#1: on December 18,2011, ST Corporation acquired 100% of a Swiss company for 3.7 million Swiss francs (CHF), which is indicative of fair value. At the acquisition date, the exchange rate was $.70=1CHF. On December 18,2011, the fair value of the subsidiary's assets and liabilities were: Cash = 500,000 CHF Inventory = 1,000,000 CHF Fixed Assets = 3,000,000 CHF Notes Payable = (800,000)CHF ST prepares consolidated financial statements on December 31, 2011. By that date, the Swiss franc has appreciated to $.75 = 1 CHF. Because of the year end holidays, no transaction took place prior to consolidation. Determine the remeasurement gain or loss to be reported in ST's 2011 consolidated net income, assuming that the US dollar is the functional currency. What is the economic relevance of this remeasurement gain or loss? #2. see attached document

International Company (an American Company) owns a Korean subsidiary. The Korean subsidiary does most of its business in YEN (Japan). Convert the Korean subsidiary's Financial Statements into the reporting currency. Korean Company Financial Statements For the Year Ending December 31,200X South Korean Won Income Statement Sales Cost of Goods Sold Operating Expenses Depreciation Expense Rate Japanese Yen Rate American Dollar 100,000 (60,000) (20,000) (10,000) Net Income 20,000 Statement of Retained Earnings Beginning Retained Earnings Net Income Ending Retained Earnings 70,000 20,000 90,000 Balance Sheet Cash Inventory Building Total Assets 130,000 140,000 820,000 1,090,000 Current Liabilities Long Term Debt Total Liabilities 60,000 340,000 400,000 Common Stock Paid In Capital Retained Earnings 200,000 400,000 90,000 0 690,000 1,090,000 Total Equity Total Liabilities and Equity Currency Rates Historic Rate - Begin Retained Earning: Historic: Average: Current: Historic: Average: Current: 1 South Korean Won 1 South Korean Won 1 South Korean Won 1 South Korean Won = = = = .0714000 Japanese Yen .0715122 Japanese Yen .0732161 Japanese Yen .0740619 Japanese Yen 1 Japanese Yen 1 Japanese Yen 1 Japanese Yen = = = .0105200 American Dollar .0103221 American Dollar .0119671 American Dollar