Instructions: Read the case and answer the following questions. Do not repeat the questions. Show your answers and supporting computations. Your submission must be typed and handed in at the class that day (or emailed to me before class if you are not attending class). Late submissions are not acceptable.

Facts of the case: ABC Corporation has had operations in Country X for 10 years. Assume that through the end of 2019 Country X has always been considered to be a highly inflationary economy and ABC has used the US dollar as its functional currency.

However, beginning January 1, 2020 Country X no longer meets the definition of a highly inflationary economy and ABC, after analyzing the factors, has determined that it will use the local currency as the functional currency.

On January 1, 2013 ABC acquired a building in Country X for local currency 20,000,000. Assume a 20 year useful life using straight line depreciation and no salvage value. The following direct exchange rates were in effect.

January 1, 2013 spot rate: 1 FC = .90 US

January 1, 2020 spot rate: 1 FC = .60 US

December 31, 2020 spot rate: 1 FC = .50 US

Average spot rate 2020: 1 FC = .55 US

Answer the following questions:

1. Find the FASB Codification Section that deals with this question; specifically what happens when a country which was previously considered as highly inflationary, no longer meets that criteria. Cut and paste the section by ###-##-## and briefly summarize in your own words what this says. (3 points)
2. What is the amount in US dollars of depreciation expense that will be reported by ABC for 2020. Show a computation. (1 point)

3. What is the amount in US dollars of Building (net of accumulated depreciation) that will be reported by ABC on December 31, 2020. Show a computation. (1 point)