Equity Investments: International

On January 1, 2015, Tradiciones, Inc., established Tradiciones de Mexico, a wholly-owned, self-sustaining Mexican subsidiary with assets valued at 48 million pesos. The peso (P) is the functional currency for Tradiciones de Mexico. The exchange rate at the time that the subsidiary was established was Ps8 per $1. On January 2, 2015, after the subsidiary was established, the exchange rate changed to Ps6 per $1.

Required

1. What is the amount of total assets that Tradiciones de Mexico will show on its balance sheet in U.S. dollars on January 1, 2015 (before the exchange rate change)?

$Answer million

2. What is the amount of the cumulative foreign currency translation adjustment that Tradiciones, Inc. will report on its balance sheet on January 2, 2015, after the exchange rate change?

$Answer million

3. At December 31, 2015, Tradiciones de Mexico reported the information below. Did the Mexican peso appreciate, remain unchanged, or depreciate against the U.S. dollar?

In millions of dollars Common StockAccumulated Other Comprehensive Income Retained Earnings Total

Net income100100

Accumulated other comprehensive income-foreign

currency translation adjustment(5)(5)