Question One: (10 marks) (B1, C1) Compaq Corporation, a U.S. Company, formed a subsidiary with a new company in Paris on January 1, 2020, by investing 400,000 Euro in exchange for all of the subsidiary's common stock. On July 1, 2020, the subsidiary purchased land for 100,000 Euro and a building for 300,000 Euro. The building is being depreciated over a 40-year life by the straight-line method. The inventory is valued at historical cost. The Euro is the subsidiary's functional currency and its reporting currency Exchange rates for the Euro on various dates were: January 1, 2020 July 1, 2020 August 1,2020 December 31, 2020 2020 average rate 1 Euro - 1.51 1 Euro - 1.56 1 Euro = 1.55 1 Euro = 1.53 1 Euro 152 The subsidiary's adjusted trial balance is presented below for the year ended December 31, 2020 Credit Debits 100,000 60,000 80,000 100,000 300,000 Cash Accounts receivable Inventory Land Building Accumulated depreciation Accounts payable Notes Payable Common stock Retained earnings Sales revenue Cost of goods sold Depreciation expense Other expenses Total 3.750 84.000 16.750 400,000 0 443.000 213.750 3.750 90,000 947.500 947,500 (Using the current rate method) Instructions: a) Translated trial balance (round to the nearest dollar). (3 marks) b) Translated income statement. (2 marks) c) Translated balance sheet. (5 marks) Answer: A. Trial Balance: Items Dr Cr Dr Cr Translation Rate B. Income Statement: Items $ C. R.E Statement: Items Balance Sheet: Items