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IBM Corporation, a U.S. Company, formed a subsidiary with a new company in Paris on January 1, 2019, by investing 400,000 Euro in exchange for

IBM Corporation, a U.S. Company, formed a subsidiary with a new company in Paris on January 1, 2019, by investing 400,000 Euro in exchange for all of the subsidiary’s common stock. On July 1, 2019, the subsidiary purchased land for 100,000 Euro and a building for 300,000 Euro. The building is being depreciated over a 40-year life by the straight-line method. The inventory is valued at historical cost.The Euro is the subsidiary’s functional currency and its reporting currency. Exchange rates for the Euro on various dates were:

January 1, 2019

1 Euro = 1.51

July 1, 2019

1 Euro = 1.56

December 31, 2019

1 Euro = 1.53

2019 average rate

1 Euro = 1.52

The subsidiary’s adjusted trial balance is presented below for the year ended December 31, 2019.


Debits

Credit

Cash

100,000


Accounts receivable

60,000


Inventory

80,000


Land

100,000


Building

300,000


Accumulated depreciation


3,750

Accounts payable


84,000

Notes Payable


16,750

Common stock


400,000

Retained earnings


0

Sales revenue


443,000

Cost of goods sold

213,750


Depreciation expense

3,750


Other expenses

90,000


Total

947,500

947,500

(Using the current rate method)


Instructions:

Translated trial balance (round to the nearest dollar).

Translated income statement.

Translated retained earnings statement.

Translated balance sheet statement.


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