Please fix the errors for both part A & B. Thanks in advance
Remeasurement of financial statements Assume that your company owns a subsidiary operating in Australia. The subsidiary has adopted the Australian Dollar (AUD) as its functional currency. Your parent company operates this subsidiary like a division or a branch office, making all of its operating decisions, including pricing of its products. You conclude, therefore, that the functional currency of this subsidiary is the $US and that its financial statements must be remeasured prior to consolidation. The subsidiary's financial statements (in AUD) for the most recent year follow in part a. below: The relevant exchange rates for the $US value of the Australian Dollar (AUD) are as follows: BOY rate $0.83 EOY rate $0.70 Avg. rate $0.76 Dividend rate $0.71 Historical rates: Beginning inventory $0.83 Land $0.72 Building $0.72 Equipment $0.72 Historical rate (common stock and APIC) $1.02 ill For parts a. and b. below, use a negative sign with answers to indicate a reduction. a. Remeasure the subsidiary's income statement, statement of retained earnings, and balance sheet into SUS for the current year (assume that the BOY Retained Earnings is $1,126,899). Round all answers in "In US Dollars" column to the nearest dollar. Remeasure (in AUD) Rate US Dollars Beginning inventory $819,500 0.83 $ 680,185 Purchases 2,143,900 0.76 1,629,364 Ending inventory (983,400) 0.7 (688,380) Cost of goods sold $1,980,000 $ 1,621,169 Land $718,960 0.72 $ 517,651 Building 1,320,000 0.72 950,400 Accum.deprec.building (660,000) 0.72 (475,200) Equipment 880,000 0.72 633,600 Accum.deprec.-equipment (440,000) 0.72 (316,800) Property, plant, and equipment (PPE), net $1,818,960 $ 1,309,651 Depreciation expense-building $66.000 0.72 $ 47,520 Depreciation expense-equipment 88,000 0.72 63,360 Depreciation expense $154,000 $ 110,880 Income statement: Sales $3,300,000 0.76 $ 2.508,000 Cost of goods sold (1,980,000) 0 X Gross profit 1,320,000 Operating expenses (704,000) 0.76 535,040 X Depreciation (154,000) OX Remeasurement gain Net income $462.000 $ 0 X Statement of retained earnings: BOY retained earnings $1,732,500 $ OX Net income 462,000 OX 0.71 (46,200) $2,148,300 (32.802) OX $ 0 X $939,180 765,600 Ox $ OX Dividends Ending retained earnings Balance sheet: Assets Cash Accounts receivable Inventory Property, plant, and equipment (PPE), net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Total liabilities and equity 983,400 1,818,960 $4.507,140 OX OX OX OX $ 0X $ OX $559,680 1,304,160 220,000 0 X OX OX OX 275,000 2,148,300 $4.507,140 $ OX b. Compute the remeasurement gain or loss directly assuming BOY net monetary assets of AUD (564,960), a net monetary liability Round all answers to the nearest dollar. Change in net monetary assets: BOY net monetary assets x (EOY - BOY exchange rates) Chg net monetary assets x (EOY - Avg exchange rate) OX Dividends x (EOY - Dividend exchange rate) OX Remeasurement gain OX >
