Question
Assume that our subsidiary reports the following financial statements in Brazilian Real (R$): Subsidiary (in R$) Income statement: Sales 2,000,000 Cost of goods sold (1,200,000)
Assume that our subsidiary reports the following financial statements in Brazilian Real (R$):
| Subsidiary (in R$) |
Income statement: |
|
Sales | 2,000,000 |
Cost of goods sold | (1,200,000) |
Gross Profit | 800,000 |
Operating expenses | (410,000) |
Net income | 390,000 |
|
|
Statement of retained earnings: |
|
BOY retained earnings | 978,500 |
Net income | 390,000 |
Dividends | (39,000) |
Ending retained earnings | 1,329,500 |
|
|
Balance sheet: |
|
Assets |
|
Cash | 318,600 |
Accounts receivable | 627,000 |
Inventory | 508,800 |
PPE, net | 1,603,700 |
Total Assets | 3,058,100 |
|
|
Liabilities and Stockholders Equity |
|
Current Liabilities | 323,400 |
Long-term Liabilities | 635,200 |
Common Stock | 120,000 |
APIC | 650,000 |
Retained Earnings | 1,329,500 |
Total Liabilities & Equity | 3,058,100 |
Also assume the following exchange rates ($:R$):
BOY Rate | $0.60 |
EOY rate | $0.90 |
Avg. rate | $0.80 |
PPE purchase date rate | $0.70 |
LTD borrowing date rate | $0.83 |
Dividend rate | $0.85 |
Historical rate (Common Stock and APIC) | $0.65 |
Required: Translate the subsidiarys financial statements into $US using the current-rate method, assuming a BOY Retained Earnings balance of $680,900.
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