On January 1, 2013, Myers Limited established a subsidiary in South Africa. The Subsidiary was named Dwyer Limited, and Myers investment was $1,250,000. When this investment was translated into South African Rand (R), the initial capitalization amounted to R500,000.

Dwyer Limited negotiated a three year bank loan of R200,000 from a South African bank when the exchange was 2.40. The company purchased depreciable capital assets for R600,000 (exchange rate = 2.30).

The company began operations. Due to an accumulation of cash through operations, Dwyer invested R200,000 in land during 2014. The exchange rate at the time of the investment was 1.90. At the end of 2014, Dwyers comparative Balance sheet and Statement of Income are as follows. Assume any dividends are declared and paid at year end.

Balance Sheet as at

December 31 (in Rand)

2014 2013

Cash R 30,000 R 160,000

Accounts receivable 40,000 30,000

Land 200,000 -

Plant and Equipment 600,000 600,000

Accumulated amortization (120,000) (60,000)

Total Assets R 750,000 R 730,000

Accounts payable R 10,000 R 20,000

Note Payable (due Jan 1, 2016) 200,000 200,000

210,000 220,000

Common Stock 500,000 500,000

Retained Earnings 40,000 10,000

Total Liabilities and Equity R 750,000 R 730,000

Income Statement

for the Year ended

December 31, 2014

Sales R 300,000

Depreciation expense 60,000

Interest expense 40,000

Other expenses 120,000

220,000

Net Income R 80,000

Other Information:

Exchange Rates:

2013 Average: 2.20

December 31, 2013: 2.00

2013 Average: 1.70

December 31, 2014: 1.50

Assume that Dwyer is considered to be an entity whose functional currency is its local currency (i.e. is self-sustaining).

Required:

Prepare translated 2014 financial statements of Dyer in order that Myers will be able to prepare consolidated financial statements.