1. Unicorn Gases (U.S. Company) owns Pryce Gases, Inc. a subsidiary in Italy, which was established December 31,2018. Pryce immediately purchased inventory for 600,000 Euros Phoenix Inc. balance sheet items as of 12/31/2018, in Euros: Cash Capital stock 1,000,000 Inventory I B I I 400,000 600,000 . Sales Less: Costs of Goods Sold Gross Profit Selling and Administrative Exp. Depreciation Expenses Cash Accounts Receivable. Inventory (FIFO) Property, Plant and Equipment Accum. Depreciation Interest Expense Income before Income Tax Income Tax Net Income Patents Total Assets Italia Inc. Balance Statement December 31, 2019 (in Euros) Accounts Payable Long-term Debts Capital Stock Retained Earnings Total Liabilities & Equity Relevant exchange rates January 1, 2019 . Rate when PPE and LT debt incurred Rate when Patent acquired Average exchange rate Year 2019 Italia Inc. Income Statement December 31, 2019 (in Euros) Retained Earnings 1/1/Y1 Net Income, Dec. 31, 2019 Less: Dividends 12/1/Y1 Retained Earnings 12/31/Y1 I December 31, 2019 LIABILITIES & EQUITY I Rate 12/1/2019 when dividends declared Average exchange rate December 2019 ASSETS Phoenix Inc. Statement of Retained Earnings December 31, 2019 (in Euros) 0 2,000,000 (200,000) 825,000 (325,000) 500,000 $2.50 = 1 euro $2.401 euro $2.35 = 1 euro $2.451 euro $2.27= 1 euro $2.25 1 euro $2.30 = 1 euro 8,000,000 6,000,000 2,000,000 500,000 200,000 180,000 1,100,000 275,000 $25,000 550,000 600,000 800,000 1,800,000 80,000 3,830,000 330,000 2,000,000 1,000,000 500,000 3,830,000 Requirement: 1. Using the given data and financial statement template, translate the financial statements using current rate method. ITALIA INCOME STATEMENT DECEMBER 31, Year 1 Sales Cost of Goods Sold Gross Profit Selling and Adm. Exp. Depreciation Expense Amortization Expense Interest Expense Income b4 Income Tax Income Tax Net Income ITALIA, INC RETAINED EARNINGS DECEMBER 31, Year 1 Retained Earnings 1/1/Y1 Net Income Less: Dividends 12/1/Y1 Retained Earnings,12/31/Y1 ITALIA BALANCE SHEET DECEMBER 31, Year 1 Cash Accts Receivable Inventory (FIFO) PPE Accum. Deprn- PPE Patents Total Assets Liabilities & Equity Accounts Payable Long-term Debts Capital Stocks Retained Earnings Liab. & Equity Translation Adjustment Liabilities & Equity (in Euro) 8,000,000 6,000,000 2,000,000 500,000 200,000 20,000 180,000 1,100,000 275,000 825,000 (in Euro) 0 825,000 (325,000) 500,000 (in Euro) 550,000 600,000 800,000 2,000,000 (200,000) 80,000 3,830,000 330,000 2,000,000 1,000,000 500,000 3,830,000 3,830,000 Exchange Rate Exchange Rate Exchange Rate (in Dollar Amt) (In US $) (In US $) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) 1. Unicorn Gases (U.S. Company) owns Pryce Gases, Inc. a subsidiary in Italy, which was established December 31,2018. Pryce immediately purchased inventory for 600,000 Euros Phoenix Inc. balance sheet items as of 12/31/2018, in Euros: Cash Capital stock 1,000,000 Inventory I B I I 400,000 600,000 . Sales Less: Costs of Goods Sold Gross Profit Selling and Administrative Exp. Depreciation Expenses Cash Accounts Receivable. Inventory (FIFO) Property, Plant and Equipment Accum. Depreciation Interest Expense Income before Income Tax Income Tax Net Income Patents Total Assets Italia Inc. Balance Statement December 31, 2019 (in Euros) Accounts Payable Long-term Debts Capital Stock Retained Earnings Total Liabilities & Equity Relevant exchange rates January 1, 2019 . Rate when PPE and LT debt incurred Rate when Patent acquired Average exchange rate Year 2019 Italia Inc. Income Statement December 31, 2019 (in Euros) Retained Earnings 1/1/Y1 Net Income, Dec. 31, 2019 Less: Dividends 12/1/Y1 Retained Earnings 12/31/Y1 I December 31, 2019 LIABILITIES & EQUITY I Rate 12/1/2019 when dividends declared Average exchange rate December 2019 ASSETS Phoenix Inc. Statement of Retained Earnings December 31, 2019 (in Euros) 0 2,000,000 (200,000) 825,000 (325,000) 500,000 $2.50 = 1 euro $2.401 euro $2.35 = 1 euro $2.451 euro $2.27= 1 euro $2.25 1 euro $2.30 = 1 euro 8,000,000 6,000,000 2,000,000 500,000 200,000 180,000 1,100,000 275,000 $25,000 550,000 600,000 800,000 1,800,000 80,000 3,830,000 330,000 2,000,000 1,000,000 500,000 3,830,000 Requirement: 1. Using the given data and financial statement template, translate the financial statements using current rate method. ITALIA INCOME STATEMENT DECEMBER 31, Year 1 Sales Cost of Goods Sold Gross Profit Selling and Adm. Exp. Depreciation Expense Amortization Expense Interest Expense Income b4 Income Tax Income Tax Net Income ITALIA, INC RETAINED EARNINGS DECEMBER 31, Year 1 Retained Earnings 1/1/Y1 Net Income Less: Dividends 12/1/Y1 Retained Earnings,12/31/Y1 ITALIA BALANCE SHEET DECEMBER 31, Year 1 Cash Accts Receivable Inventory (FIFO) PPE Accum. Deprn- PPE Patents Total Assets Liabilities & Equity Accounts Payable Long-term Debts Capital Stocks Retained Earnings Liab. & Equity Translation Adjustment Liabilities & Equity (in Euro) 8,000,000 6,000,000 2,000,000 500,000 200,000 20,000 180,000 1,100,000 275,000 825,000 (in Euro) 0 825,000 (325,000) 500,000 (in Euro) 550,000 600,000 800,000 2,000,000 (200,000) 80,000 3,830,000 330,000 2,000,000 1,000,000 500,000 3,830,000 3,830,000 Exchange Rate Exchange Rate Exchange Rate (in Dollar Amt) (In US $) (In US $) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27)