Question:Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2015, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows:

Main OperationCanada

Debit Credit

Accounts payableC$ 49,915

Accumulated depreciation 46,000

Buildings and equipment C$ 186,000

Cash 45,000

Common stock69,000

Cost of goods sold 222,000

Depreciation expense 8,800

ividends, 4/1/15 38,000

Gain on sale of equipment, 6/1/156,900

Inventory 98,000

Notes payabledue in 201888,000

Receivables 87,000

Retained earnings, 1/1/15154,590

Salary expense 42,000

Sales331,000

Utility expense 10,900

Branch operation 7,705

Totals C$ 745,405C$ 745,405

Branch OperationMexico

Debit Credit

Accounts payablePs 71,900

Accumulated depreciation44,400

Building and equipment Ps 59,000

Cash 68,500

Depreciation expense 3,900

Inventory (beginningincome statement) 42,000

Inventory (endingincome statement)37,500

Inventory (endingbalance sheet) 37,500

Purchases 76,000

Receivables 40,000

Salary expense 10,900

Sales143,000

Main office41,000

Totals Ps 337,800Ps 337,800

Additional Information

The Canadian subsidiary's functional currency is the Canadian dollar, and Sendelbach's reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities.

The building and equipment used in the Mexican operation were acquired in 2005 when the currency exchange rate was C$0.17 = Ps 1.

Purchases should be assumed as having been made evenly throughout the fiscal year.Beginning inventory was acquired evenly throughout 2014; ending inventory was acquired evenly throughout 2015.

The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,705 on December 31, 2015.

Currency exchange rates for 1 Ps applicable to the Mexican operation follow:

Weighted average, 2014C$0.22

January 1, 20150.24

Weighted average rate for 20150.26

December 31, 20150.27

The December 31, 2014, consolidated balance sheet reported a cumulative translation adjustment with a $55,950 credit (positive) balance.

The subsidiary's common stock was issued in 2004 when the exchange rate was $0.48 = C$1.The subsidiary's December 31, 2014, Retained Earnings balance was C$154,590.00, a figure that has been translated into US$67,443.

The applicable currency exchange rates for 1 C$ for translation purposes are as follows:

January 1, 2015US$0.70

April 1, 20150.69

June 1, 20150.68

Weighted average rate for 20150.67

December 31, 20150.65

a.Remeasure the Mexican operation's figures into Canadian dollars. (Hint:Back into the beginning net monetary asset or liability position.)

b.Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency and Prepare consolidated financial statement in parent currency (that is U.S. dollars).