Question 4 Not complete Marked out of 10.00 P Flag question Remeasurement of financial statements Assume that your company owns a subsidiary operating in Canada. The subsidiary has adopted the Canadian Dollar (CAD) 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 CAD) for the most recent year follow in part a. below: The relevant exchange rates for the $US value of the Canadian Dollar (CAD) are as follows: BOY rate S0.73 EOY rate $0.79 Avg. rate S0.76 Dividend rate $0.78 Historical rates: Beginning inventory $0.73 Land S0.77 Building $0.77 Equipment 50.77 Historical rate (common stock and APIC) 50.63 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 $US for the current year (assume that the BOY Retained Earnings is $2,216,365). Round all answers in the "In US Dollars" column to the nearest dollar. Remeasure In (in CAD) -ment Rate US Dollars Beginning inventory 1,303,750 $ Purchases 3,410,750 Ending inventory (1,564,500) Cost of goods sold 3,150,000 Land 1,143,800 Building 2,100,000 Accum.deprec-building (1,050,000) Equipment 1,400,000 Accum.deprec.-equipment (700,000) Property, plant, and equipment (PPE), net 2,893,800 $ $ $ $ 105,000 140,000 245,000 $ Depreciation expense-building Depreciation expense-equipment Depreciation expense Income statement: Sales Cost of goods sold Gross profit Operating expenses Depreciation $ 5,250,000 (3,150,000) 2,100,000 (1,120,000) (245,000) . $ $ $ $ Net income 735,000 Statement of retained earnings: BOY retained earnings 2,756,250 Net income 735,000 Dividends (73,500) Ending retained earnings 3,417,750 Balance sheet: Assets Cash 1,494,150 Accounts receivable 1,218,000 Inventory 1,564,500 Property, plant, and equipment (PPE), net 2,893,800 Total assets 7,170,450 Liabilities and stockholders' equity Current liabilities 890,400 Long-term liabilities 2,074,800 Common stock 350,000 APIC 437,500 Retained earnings 3,417,750 Total liabilities and equity 7,170,450 $ $ $ b. Compute the remeasurement gain or loss directly assuming BOY net monetary assets of CAD (898,800), a net monetary liability. Round all answers to the nearest dollar. Change in net monetary assets: $ Chg net monetary assets x (EOY - Avg exchange rate) $ Check