Assume that your company owns a subsidiary operating in New Zealand. The subsidiary has adopted the New Zealand Dollar (NZD) for its book-keeping purposes. Your parent company operates this subsidiary like a division or a branch office, making all of its operating decisions, including pricing of its products. You conclude, therefore, that the functional currency of this subsidiary is the USD and that its financial statements must be remeasured using the temporal method prior to consolidation.

The relevant exchange rates are:

• Beginning of year: 0.76
• End of year: 0.93
• Average rate: 0.83
• Dividend rate: 0.92
• Historical rate for beginning inventory: 0.76
• Historical rate for land: 0.60
• Historical rate for building: 0.61
• Historical rate for equipment: 0.62
• Historical rate for common stock and APIC: 0.48

Required

1. Fill in the correct remeasurement exchange rates in the first table of this worksheet. You don't need to do the actual remeasurement, just fill in the correct rates.

2. Compute COGS using the information provided

Table 1: Fill in the relevant rates.
Account	Rate
Sales
COGS
Operating expenses
Depreciation expense-building
Depreciation expense-equipment
BOY retained earnings
Net income
Dividends
Ending retained earnings
Cash
A/R
Inventory
Land
Building
A/D-Building
Equipment
A/D Equipment
Current liabilities
LT Liabilities
Common Stock
APIC
Remeasurement gain or loss
Table 2: Compute COGS
	NZD	Exchange Rate	USD
Computation of COGS
Beginning Inventory,1/1/17	1,117,500
Plus: Purchases	2,923,500
Less: Ending Invenotry, 12/31/17	-1,341,000
COGS, 2017	2,700,000