On January $1,2024,$ a U$.$S$.$ company purchased $100\%$ of the outstanding stock of Ivanhoe Grains, a company located in Latz City, New Zealand. Ivanhoe Grains was organized on January $1,2005.$ All the property, plant, and equipment held on January $1,2024,$ was acquired when the company was organized. The business combination was accounted for as a purchase transaction. The $2024$ financial statements for Ivanhoe Grains, prepared in its local currency, the New Zealand dollar, are given here.

IVANHOE GRAINS

Comparative Balance Sheets

January $1$ and December $31,2024$

Jan. $1$ Dec. $31$

Cash and Receivables $499,000884,000$

Inventories $606,000503,000$

Land $396,000396,000$

Buildings $($net$)653,000601,000$

Equipment $($net$)470,000472,000$

Totals $2,624,0002,856,000$

Short$-$Term Accounts and Notes $292,000212,000$

Long$-$Term Notes $(598,000$ issued

September $1,2016,89,000$ issued

July $1,2024)598,000687,000$

Common Stock $800,000800,000$

Additional Paid$-$in Capital $200,000200,000$

Retained Earnings $734,000957,000$

Total $2,624,0002,856,000$

Ivanhoe GRAINS

Consolidated Income and Retained Earnings Statement

for the Year Ended December $31,2024$

Revenues $3,225,000$

Cost of Goods Sold:

Beginning Inventory $606,000$

Purchases $2,085,000$

Goods Available for Sale $2,691,000$

Less: Ending Inventory $503,000$

Cost of Goods Sold $2,188,000$

Gross Profit on Sales $1,037,000$

Depreciation Expense $142,000$

Other Expenses $538,000680,000$

Net Income $357,000$

Jan. $1$ Retained Earnings $734,000$

Total $1,091,000$

Less: Dividends Paid $134,000$

Dec. $31$ Retained Earnings $957,000$

The account balances are computed in conformity with U$.$S$.$ generally accepted accounting standards.

Other information is as follows:

$1.$ Direct exchange rates for the New Zealand dollar on various dates were:

Date Exchange Rate

January $1,2005$ $$0\mathrm{.}8011$

September $1,20150\mathrm{.}5813$

January $1,20240\mathrm{.}7924$

July $1,20240\mathrm{.}7412$

December $31,20240\mathrm{.}7298$

Average for $20240\mathrm{.}7480$

Average for the last four months of $20240\mathrm{.}7476$

$2.$ Ivanhoe Grains purchased additional equipment for $92,000$ New Zealand dollars on July $1,2024,$ by issuing a note for $89,000$ New Zealand dollars and paying the balance in cash.

$3.$ Sales were made and purchases and $$Other Expenses$$ were incurred evenly throughout the year.

$4.$ Depreciation for the period in New Zealand dollars was computed as follows:

Building $52,000$

Equipment$$Purchased before $1/1/202480,800$

Equipment$$Purchased July $1,20249,200$

$5.$ The inventory is valued on a FIFO basis. The beginning inventory was acquired when the exchange rate was $$0\mathrm{.}7480.$ The ending inventory was acquired during the last four months of $2024.$

$6.$ Dividends of $67,000$ New Zealand dollars were paid on July $1$ and December $31.$

$($a$)$

Translate the financial statements into dollars assuming that the local currency of the foreign subsidiary was identified as its functional currency. $($Round answers to $0$ decimal places, e$.$g$.5,125.$ Enter loss and debit translation adjustment using either a negative sign preceding the number e$.$g$.-2,945$ or parentheses e$.$g$.(2,945).)$

New

Zealand $ Translation

Rate U$.$S$.$

$

Consolidated Income and Retained Earnings Statement

$

:

:

Balance Sheet

:

Totals

Totals

Totals

Attempts: $0$ of $2$ used

$($b$)$

Prepare a schedule to verify the translation adjustment determined in part a$.$ Describe how the translation adjustment would be reported in the financial statements. $($Round answers to $0$ decimal places, e$.$g$.5,125.$ Enter loss and debit cumulative translation adjustment using either a negative sign preceding the number e$.$g$.-2,945$ or parentheses e$.$g$.(2,945).)$

New

Zealand $ Translation

Rate U$.$S$.$

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