2/11/2020 Part III. (35 points) Doner Company Inc. established a foreign subsidiary on January 1, Year I Revenues and expenses occur evenly throughout the year. The exchange rates for Year 1 are as follows ($ per FC): January 1 $1.00 February 1, FC50,000 Equipment was purchased 0.95 Average 0.90 December 1, FC10,000 Dividend was declared. 0.85 December 31 0.80 Required: a. Assuming that FC is the subsidiary's functional currency, translate the subsidiary's financial statements to U.S. dollars. Year 1 Exchange rate Year 1 Income Statement FC 100,000 Revenues Depreciation (5,000) Other expenses (35,000) Net income 60,000 Exchange rate Year 1 Statement of Retained Earnings Year 1 FC Retained carnings, 1/1/41 Add: Net income 60,000 Deduct: Dividend (10,000) Retained earnings, 12/31/41 50,000 Balance Sheet Exchange rate Year 1 Cash and receivable Property and equipment, net Total Year 1 FC 75,000 45,000 120.000 Accounts payable Common stock Retained earnings 15,000 55,000 50,000 Total 120,000 2/11/2020 b. Assuming that U.S. dollar is the subsidiary's functional wrency translate the subsidiary's statements to U.S. dollars. Income Statement subsidiary's financial Year 1 Exchange rate Revenues Depreciation Other expenses 100,000 (5,000) (35,000) Net income 60.000 Statement of Retained Earnings Year 1 Exchange rate Retained earnings, 1/1/41 Add: Net income 60,000 Deduct: Dividend Retained earnings, 12/31/41 (10,000) 50.000 Balance Sheet Exchange rate Year 1 Year 1 FC 75,000 Cash and receivable Property and equipment, net 45,000 120.000 Total Accounts payable Common stock Retained earnings 15,000 55,000 50.000 Total 120.000