Diekmann Company, a U.S.-based company, acquired a 100 percent interest in Rakona A.S. in the Czech Republic on January 1, 2016, when the exchange rate for the Czech koruna (Ks) was $0.05. Rakona's financial statements as of December 31, 2017, two years later, follow: Ks Balance Sheet December 31, 2017 Assets Cash Accounts receivable (net) Inventory Equipment Less: Accumulated depreciation Building Less: Accumulated depreciation Land Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Common stock Additional paid-in capital Retained earnings Total liabilities and stockholders' equity 2,000,000 3,300,000 8,500,000 25,000,000 (8,500,000) 72,000,000 (30, 300,000) 6,000,000 78,000,000 Ks 2,500,000 50,000,000 5,000,000 15,000,000 5,500,000 78,000,000 Ks Income Statement For Year Ending December 31, 2017 Sales Ks Cost of goods sold Depreciation expense-equipment Depreciation expense-building Research and development expense Other expenses (including taxes) Net income Ks Plus: Retained earnings, 1/1/17 Less: Dividends, 2017 Retained earnings, 12/31/17 Ks 25,000,000 (12,000,000) (2,500,000) (1,800,000) (1, 200,000) (1,000,000) 6,500,000 500,000 (1, 500,000) 5,500,000 Additional Information The January 1, 2017, beginning inventory of Ks 6,000,000 was acquired on December 18, 2016, when the exchange rate was $0.043. Purchases of ventory were acquired uniformly during 2017. The December 31, 2017, ending inventory of Ks 8,500,000 was acquired in the latter part of 2017 when the exchange rate was $0.032. All depreciable assets (equipment and buildings) were on the books when the subsidiary was acquired except for Ks 5,000,000 of equipment acquired on January 3, 2017, when the exchange rate was $0.036, and Ks 12,000,000 in buildings acquired on March 5, 2017, when the exchange rate was $0.034. Straight-line depreciation is 10 years for equipment and 40 years for buildings. A full year's depreciation is taken in the year of acquisition. The January 1, 2017, beginning inventory of Ks 6,000,000 was acquired on December 18, 2016, when the exchange rate was $0.043. Purchases of inventory were acquired uniformly during 2017. The December 31, 2017, ending inventory of Ks 8,500,000 was acquired in the latter part of 2017 when the exchange rate was $0.032. All depreciable assets (equipment and buildings) were on the books when the subsidiary was acquired except for Ks 5,000,000 of equipment acquired on January 3, 2017, when the exchange rate was $0.036, and Ks 12,000,000 in buildings acquired on March 5, 2017, when the exchange rate was $0.034. Straight-line depreciation is 10 years for equipment and 40 years for buildings. A full year's depreciation is taken in the year of acquisition Dividends were declared and paid on December 15, 2017, when the exchange rate was $0.031. Other exchange rates for 1 Ks follow: January 1, 2017 Average 2017 December 31, 2017 $ 0.040 0.035 0.030 Translate the Czech koruna financial statements at December 31, 2017, in the following three situations: a. The Czech koruna is the functional currency. The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $22,500. The December 31, 2016, cumulative translation adjustment was negative $202,500 (debit balance). b. The U.S. dollar is the functional currency. The December 31, 2016, U.S. dollar-remeasured balance sheet reported retained earnings (including a 2016 remeasurement gain) of $353,000. c. The U.S. dollar is the functional currency. Rakona has no long-term debt. Instead, it has common stock of Ks 20,000,000 and additional paid-in capital of Ks 50,000,000. The December 31, 2016, U.S. dollar-remeasured balance sheet reported a negative balance in retained earnings of $147,000 (including a 2016 remeasurement loss). Complete this question by entering your answers in the tabs below. Required A Required B Required C The Czech koruna is the functional currency. The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $22,500. The December 31, 2016, cumulative translation adjustment was negative $202,500 (debit balance). (Amounts to be deducted and negative amounts should be indicated with a minus sign.) Required A Required B Required C The Czech koruna is the functional currency. The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $22,500. The December 31, 2016, cumulative translation adjustment was negative $202,500 (debit balance). (Amounts to be deducted and negative amounts should be indicated with a minus sign.) US$ Income Statement: 60,000 Cash Accounts receivable Inventory Equipment Accumulated depreciation (equipment) Building Net income Net loss 60.000 60,000 Balance Sheet Assets: Total assets 0 Liabilities and equities Total liabilities and equities 0 Required A Required B Required C The U.S. dollar is the functional currency. The December 31, 2016, U.S. dollar-remeasured balance sheet reported retained earnings (including a 2016 remeasurement gain) of $353,000. (Amounts to be deducted and negative amounts should be indicated with a minus sign.) US$ Income Statement: 01 Income before remeasurement gain Remeasurement gain, 2017 0 ol Balance Sheet: Assets: Total assets Liabilities and Stockholders' Equity: Total liabilities and stockholders' equity Required A Required B Required c The U.S. dollar is the functional currency. Rakona has no long-term debt. Instead, it has common stock of Ks 20,000,000 and additional paid-in capital of Ks 50,000,000. The December 31, 2016, U.S. dollar-remeasured balance sheet reported a negative balance in retained earnings of $147,000 (including a 2016 remeasurement loss). (Amounts to be deducted and negative amounts should be indicated with a minus sign.) Show less US$ Income Statement: 0 Income before remeasurement gain Remeasurement gain, 2017 0 Balance Sheet: Assets: Total assets Liabilities and Stockholders' Equity: Total liabilities and stockholders' equity