Question
Apex Aurelia is a wholly owned subsidiary of U.S.-based Apex Consolidated, Inc. Apex Aurelia operates in a foreign country, Aurelia, with financial statements recorded in
Apex Aurelia is a wholly owned subsidiary of U.S.-based Apex Consolidated, Inc. Apex Aurelia operates in a foreign country, Aurelia, with financial statements recorded in bolivars (AB), the companys functional currency. Financial statements for 2021 are as follows:
Income Statement for Year Ended December 31, 2021 | |
Sales | AB 270,000 |
Cost of goods sold | (155,000) |
Gross profit | 115,000 |
Less: Operating expenses | (54,000) |
Gain on sale of equipment | 10,000 |
Net income | AB 71,000 |
Statement of Retained Earnings for Year Ended December 31, 2021 | |
Retained earnings, 1/1/21 | AB 216,000 |
Net income | 71,000 |
Less: Dividends | (26,000) |
Retained earnings, 12/31/21 | AB 261,000 |
Balance Sheet for Year Ended December 31, 2021 | |
Assets |
|
Cash | AB 44,000 |
Receivables | 116,000 |
Inventory | 58,000 |
Property, plant, and equipment (net) | 339,000 |
Total assets | AB 557,000 |
Liabilities and Equities |
|
Liabilities | AB 176,000 |
Common stock | 120,000 |
Retained earnings, 12/31/21 | 261,000 |
Total liabilities and equities | AB 557,000 |
Additional Information
The common stock was issued in 2014 when the exchange rate was $2.08 per AB; property, plant, and equipment was acquired in 2015 when the rate was $2.00 per AB.
As of January 1, 2021, the retained earnings balance was translated as $396,520.
The U.S.$ per AB exchange rates for 2021 follow:
January 1 $1.67
April 1 1.61
September 1 1.72
December 31 1.54
Weighted average 1.59
Inventory was acquired evenly throughout the year.
The December 31, 2020 balance sheet reported a translation adjustment with a debit balance of $85,000.
Dividends were declared on April 1, 2021, and a piece of equipment was sold on September 1, 2021.
Required
Assume that the bolivar is Apex Aurelias functional currency. Translate the 2021 foreign currency financial statements into the parents reporting currency, the U.S. dollar.
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