Assume that the balance sheet and income statement of a French subsidiary, which keeps its books in euro, is translated into U.S. dollars, the reporting currency of the U.S. parent company.

The table presents the balance sheet and income statement in euro. The subsidiary is at the end of its first year of operation. The historical exchange rate is $1.60/1.00 and the most recent

exchange rate is $2.00/. The weighted average exchange rate for translating revenues and costs are $1.7778/.

Prepare the translated balance sheet for the French subsidiary using the temporal and the current rate method.

BALANCE SHEET

Cash: 2,100 Current Liabilities: 1,200

Inventory (market value = 1,800): 1,500 Long-term Debt: 1,800

Net Fixed Assets: 3,000 Common Stock: 2,700

Total Assets: 6,600 Retained Earnings: 900

TOTAL LIAB + OE: 6,600