On January 1, 20x1, Newberry Co. formed an operating a subsidiary in a foreign country by acquiring all of the common stock of Sompura Company for $126,000. Sompuras local currency is the LCU.

Assume that Sompura, Inc. declares dividends on June 1, 20x1 and 20x2.

As of fiscal fye 12/31/20x2, Sompura, Inc. issued the following Income Statement and Balance Sheet, for this problem, please ignore income taxes):

Sompura, Inc.
Income Statement
fye 12/31/20x2
(in LCUs)
Sales	800,000
Cost of goods sold	(420,000)
Salary expense	(74,000)
Rent expense	(36,000)
Other expenses	(59,000)
Gain on sale of building, 10/1/20x2	30,000
Net income	241,000

Sompura, Inc.
Balance Sheet
as of 12/31/20x2
(in LCUs)
Assets
Cash and receivables	146,000
Inventory	297,000
Prepaid expense	10,000
Property, plant and equipment (net)	455,000
Total assets	908,000
Liabilities and Equity
Accounts payable	54,000
Notes payable	140,000
Common stock	240,000
Additional paid-in capital	150,000
Retained earnings, 12/31/20x2	324,000
Total liabilities and equities	908,000

At 1/1/20x1, the date of acquisition, Sompura did not have a retained earnings account balance. During fiscal years 20x1 and 20x2, Sompura generated net income and dividends, as follows:

Fiscal year-ending
	20x1	20x2
Net income	163,000	241,000
Dividends	30,000	50,000

Required

Assuming the subsidiarys functional currency is LCUs, prepare Sompura, Inc.s (the foreign subsidiary):

1. Statement of Retained Earnings for the year ending December 31, 20x1 in LCUs;
2. Income Statement for the fiscal year ending December 31, 20x2, as translated into U.S. dollars;
3. Statement of Retained Earnings for the fiscal year-ending 12/31/20x2, as translated into U.S. dollars;
4. Balance Sheet as of December 31, 20x2, as translated into U.S. dollars; and
5. A schedule showing the computation of the cumulative translation adjustment as of 12/31/20x2 (See schedule on textbook page 491, Computation of Translation Adjustment). Assume that the initial line of your schedule is as follow:

	LCU		$
Net assets - 1/1/20x2	523,000	0.280	$146,440

(Note that the translation adjustment as of 12/31/20x1 = ($8,804))

For your work above, refer to the following translation rates:

Translation rates LCU1 =
1/1/20x1	$0.300
6/1/20x1	$0.290
Average rate for fye 20x1	$0.288
12/31/20x1	$0.280
6/1/20x2	$0.275
10/1/20x2	$0.273
Average rate for fye 20x2	$0.274
12/31/20x2	$0.270