On Ch. 8 Slide 21, the translated balance of "Plant and equipment" is $55,000. Does this represent the current cost of the asset in the U.S.? In South Africa? Explain.

Hint: Neither. Carefully explain why.

South African rand is functional currency (Current rate method)

Retained earnings, 1/1/Y1 (using HC for equity accounts) Net income, Year 1 110,000 10,560 Dividends, 6/1/Y1 (20,000) 0.095 (1,900) Dividends, 12/1/Y1 _(20,000) 0.105 (2,100) Retained earnings, 12/31/Y1 70,000 6,560 Cash (using Current rate for assets and liabilities) 80,000 0.110 8,800 Receivables 150,000 0.110 16,500 Inventory 270,000 0.110 29,700 Plant and equipment 500,000 0.110 55,000 Less: accumulated depreciation (50,000) 0.110 (5.500) Total assets 950,000 104,500