EXERCISE 13-4 Foreign Currency Translation-Current Rate Method LO 7 On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2014 financial statements stated in Swiss francs are given below. GRANT MANAGEMENT CONSULTANTS Comparative Balance Sheets January 1 and December 31, 2014 Cash and Receivables Net Property, Plant, and Equipment Totals Accounts and Notes Payable Common Stock Retained Earnings Totals Jan. 1 Dec. 31 20,000 55,000 40.000 37,000 60,000 92,000 30,000 32,000 20,000 20,000 10.000 40,000 60,000 92,000 GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended T Revenues December 31, 2014 Operating Expenses including Depreciation of 3,000 francs 75,000 30.000 01 3 04 04 05 QAA P GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2014 Revenues Operating Expenses including Depreciation of 3,000 francs Net Income Dividends Declared and Paid Increase in Retained Earnings 75,000 30,000 45,000 15.000 30,000 Direct exchange rates for Swiss franc are: Dollars per Swiss Franc January 1, 2014 $1.09 December 31, 2014 1.03 Average for 2014 1.06 Dividend declaration and payment date 1.08 Required: A. Translate the year-end balance sheet and income statement of the foreign subsidiary using the current rate method of translation. B. Prepare a schedule to verify the translation adjustment. EXERCISE 13-5 Required: A. Translate the year-end balance sheet and income statement of the foreign subsidiary using the current rate method of translation. B. Prepare a schedule to verify the translation adjustment. EXERCISE 13-5 Foreign Currency Remeasurement-Temporal Method LO 8 Use the information provided in Exercise 13-4. Required: A. Convert (remeasure) the financial statements of the foreign subsidiary using the temporal method of translation. B. Prepare a schedule to verify the translation gain or loss