NEED HELP WITH PART B ONLY THANK YOU
Translation of financial statements Assume that your company owns a subsidiary operating in France. The subsidiary conducts most of its business activities in the European Economic Union and maintains its books in the Euro as its functional currency. The subsidiary's financial statements (in ) for the most recent year follow in part a. below: The relevant exchange rates ($:1) are as follows: BOY rate $0.97 $1.06 $1.03 EOY rate Avg. rate PPE purchase date rate LTD borrowing date rate Dividend rate $1.02 $1.05 $1.04 Historical rate (common stock and APIC) $0.65 For both parts a. and b. below, use a negative sign with answers to indicate a reduction. a. Translate the subsidiary's income statement statement of retained earnings, balance sheet, and statement of cash flows into SUS using the current-rate method (assume that the BOY Retained Earnings is $312,562. Round all answers to the nearest dollar (for parta only Translation Income Statement: In Euros Rate US Dollars 750,000 1.035 772,500 Custolyuuds sold 1450,000 1.03 463.500) Gross profit 300.000 309,000 Operating expenses 1195.000 1.03 200.650) Net Income 105.000 $ 108,150 Statement of Retained Earnings: ROY .arnings C394,750 $ 312.00 Net incarne 105.000 104,150 Dividends {10,5001 1.04 (10.520) LOY ret. earnings 648.250 $ 409,792 Balance Sheet: Assets Cash C213430 1,06 $ 226,257 Accounts ronivable 174.000 1.06 184,440 Inventory 223,500 1,06 236,910 Property, plant, and equipment (PPEI.net 413,400 1.06 438,204 Total assets 1.024,350 $ 1,085,811 Liabilises and stockholders' equity Curr.labilties 127,200 1.06 134832 I Thattin 29.400 314,184 Common stock 50,000 22,500 APIC 62,500 0.65 40,625 Ret earnings 485,250 409,792 Cumulathe translation adjustment 159,878 Tota labilities and equity 1,024.350 $ 1085,811 $ 1.03 1.03 1.03 1.03 Statement of Cash Flows: Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities Change in PPE, net Net cash from investing activities Change in long-term debt Dividends Net cash from financing activities Net change in cash Effect of exchange rate on cash Beginning cash Ending cash 105,000 (29,000) (37,250) 21,200 59,950 (38,400) (38,400) 49,400 (10,500) 38,900 60,450 1.02 108,150 (29,870) (38,368) 21,836 61,748 (39,168) (39,168) 51,870 (10,920) 40,950 63,530 14,317 148,410 226,257 1.05 1.04 153,000 0.97 213,450 $ b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $105,375.50. Do not round your answers for part b. $ Direct computation of translation adjustment: BOY net assets x (EOY - BOY exchange rates) Net income x (EOY - Average exchange rate) Dividends x (EOY - Dividend exchange rate) OX OX OX 0 x BOY cumulative translation adjustment EOY cumulative translation adjustment
