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Q8) How much should Note Payable report on the Israeli subsidiary s TB on Dec 31 2017 under remeasurement of CHF balance into ILS? The

Q8) How much should Note Payable report on the Israeli subsidiary s TB on Dec 31 2017 under remeasurement of CHF balance into ILS? The Isle of Palms Company (IOP), a U.S.-based entity, has a wholly owned subsidiary in Israel that has been determined as having the Israeli shekel (ILS) as its functional currency. On October 1, 2016, the Israeli subsidiary borrowed 500,000 Swiss francs (CHF) from a bank in Geneva for two years at an interest rate of 5 percent per year. The note payable and accrued interest are payable at the date of maturity. On December 31, 2017, the Israeli subsidiary has the following foreign currency balances on its books:

Interest expense

CHF 25,000

Interest payable

CHF 31,250

Note payable

CHF 500,000

Relevant exchange rates between the Israeli shekel (ILS) and Swiss franc (CHF), and between the U.S. dollar (USD) and Israeli shekel (ILS) follow :

ILS per CHF

USD per ILS

October 1, 2016

3.86

0.30

January 1, 2017

3.91

0.29

Average for 2017

3.95

0.27

December 31, 2017

4.02

0.25

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