Incorrect answers and part b

Remeasurement of financial statements Assume that your company owns a subsidiary operating in Australia. The subsidiary has adopted the Australian Dollar (AUD) as its functional currency. 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 $US and that its financial statements must be remeasured using the temporal method prior to consolidation. The subsidiary's financial statements (in AUD) for the most recent year follow in part a. below: The relevant exchange rates for the $U5 value of the Australian Dollar (AUD) are as follows: BOY rate $0.78 COY rate $0.95 Avg. rate $0.35 Dividend rate $0.94 Historical rates: Beginning inventory $0.78 Land $0.52 Building $0.53 Equipment $0.54 Historical rate (common stack and APIC) $0.50 For parts a. and b. below, use a negative sign with answers to indicate a reduction a. Remeasure the subsidiary's income statement, statement of retained earnings, and balance sheet into SUS using the temporal method for the current year (assume that the BOY Retained Earnings is $3,251,172). Round all answers in the "In US Dollars" column to the nearest dollar. Remeasure (in AUD) Rate US Dollars Beginning inventory $2.235.000 0.78 $ 1.743,300 Purchases 5.847,000 0.85 4969,950 Ending inventory (2.682,000) 0.95 2,547,900) Cost of goods sold $5,400.000 $ 4,165,350 Land $1.960.800 0.62 $ 1,215,696 Building 3,600,000 0.63 2,268,000 Accum.deprec.-building (1,800,000) 0.63 (1,134,000) Equipment 2,400,000 0.64 1,536,000 Accum.deprec, equipment (1,200,000) 0.64 (768,000) Property, plant, and equipment (PPE), nel $4,960,800 $ 3,117,696 Depreciation expense-building $180.000 0.63 $ 113,400 Depreciation expense equipment 240,000 0.64 153,600 Depreciation expense $420,000 $ 267,000 Income statement: Sales $9,000,000 0.85 $ 7,650,000 Cosi al goods sold (5,400,000) (4,165,350) Gross profit 3,600,000 3,484.650 Operating expenses (1.920,000) 0.85 1,632,000) Depreciation (420,000) 264,600 x Remeasurement loss OX Net income $1.260,000 Ox $4,725,000 $ Statement of retained earnings: BOY retained earnings Net income Dividends Ending retained earnings Balance sheet: 1,260,000 (126,000) $5,859,000 3,251,172 0 x 118,440 X OX 0.94 Assets $ 0.95 0.95 Cash Accounts receivable Inventory Property, plant, and equipment (PPE), net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock $2,561,400 2,088,000 2,682,000 4,960,800 $12,292,200 2,433,330 1,983,600 2,547,900 3,117,696 10,082,526 $ $ $1,526,400 3,556,800 600,000 750,000 5,859,000 $12,292,200 0.95 0.95 0.5 0.5 1,450,080 3,378,960 300,000 375,000 0x APIC Retained earnings Total liabilities and equity $ b. A Compute the remeasurement gain or loss directly assuming BOY net monetary assets of (1,540,800), a net monetary liability. Round answers to the nearest dollar. $ Change in net monetary assets: BOY net monetary assets x (EOY - BOY exchange rates) - Chg net monetary assets x (EOY - Avg exchange rate) Dividends x (EOY - Dividend exchange rate) Remeasurement loss OX OX $ 0x Remeasurement of financial statements Assume that your company owns a subsidiary operating in Australia. The subsidiary has adopted the Australian Dollar (AUD) as its functional currency. 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 $US and that its financial statements must be remeasured using the temporal method prior to consolidation. The subsidiary's financial statements (in AUD) for the most recent year follow in part a. below: The relevant exchange rates for the $U5 value of the Australian Dollar (AUD) are as follows: BOY rate $0.78 COY rate $0.95 Avg. rate $0.35 Dividend rate $0.94 Historical rates: Beginning inventory $0.78 Land $0.52 Building $0.53 Equipment $0.54 Historical rate (common stack and APIC) $0.50 For parts a. and b. below, use a negative sign with answers to indicate a reduction a. Remeasure the subsidiary's income statement, statement of retained earnings, and balance sheet into SUS using the temporal method for the current year (assume that the BOY Retained Earnings is $3,251,172). Round all answers in the "In US Dollars" column to the nearest dollar. Remeasure (in AUD) Rate US Dollars Beginning inventory $2.235.000 0.78 $ 1.743,300 Purchases 5.847,000 0.85 4969,950 Ending inventory (2.682,000) 0.95 2,547,900) Cost of goods sold $5,400.000 $ 4,165,350 Land $1.960.800 0.62 $ 1,215,696 Building 3,600,000 0.63 2,268,000 Accum.deprec.-building (1,800,000) 0.63 (1,134,000) Equipment 2,400,000 0.64 1,536,000 Accum.deprec, equipment (1,200,000) 0.64 (768,000) Property, plant, and equipment (PPE), nel $4,960,800 $ 3,117,696 Depreciation expense-building $180.000 0.63 $ 113,400 Depreciation expense equipment 240,000 0.64 153,600 Depreciation expense $420,000 $ 267,000 Income statement: Sales $9,000,000 0.85 $ 7,650,000 Cosi al goods sold (5,400,000) (4,165,350) Gross profit 3,600,000 3,484.650 Operating expenses (1.920,000) 0.85 1,632,000) Depreciation (420,000) 264,600 x Remeasurement loss OX Net income $1.260,000 Ox $4,725,000 $ Statement of retained earnings: BOY retained earnings Net income Dividends Ending retained earnings Balance sheet: 1,260,000 (126,000) $5,859,000 3,251,172 0 x 118,440 X OX 0.94 Assets $ 0.95 0.95 Cash Accounts receivable Inventory Property, plant, and equipment (PPE), net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock $2,561,400 2,088,000 2,682,000 4,960,800 $12,292,200 2,433,330 1,983,600 2,547,900 3,117,696 10,082,526 $ $ $1,526,400 3,556,800 600,000 750,000 5,859,000 $12,292,200 0.95 0.95 0.5 0.5 1,450,080 3,378,960 300,000 375,000 0x APIC Retained earnings Total liabilities and equity $ b. A Compute the remeasurement gain or loss directly assuming BOY net monetary assets of (1,540,800), a net monetary liability. Round answers to the nearest dollar. $ Change in net monetary assets: BOY net monetary assets x (EOY - BOY exchange rates) - Chg net monetary assets x (EOY - Avg exchange rate) Dividends x (EOY - Dividend exchange rate) Remeasurement loss OX OX $ 0x