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 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 $1,126,899). Round all answers in "In US Dollars" column to the nearest dollar. 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 $1,126,899). Round all answers in "In US Dollars" column to the nearest dollar. Remeasure In Rate US Dollars 0 $ 0 0 0 0 0 0 0 $ 0 05 0 0 0 0 0 0 0 0 0 0 0 (in AUD) Beginning inventory $819.500 Purchases 2.143.900 Ending inventory (983,400) Cost of goods sold $1,980,000 Land $718,960 Building 1,320.000 Accum.deprec-building (660,000) Equipment 880,000 Accum.deprec-equipment (440,000) Property, plant, and equipment (PPE), net 51.818.960 Depreciation expense-building $66.000 Depreciation expense-equipment 88,000 Depreciation expense $154,000 Income statement: Sales 53,300,000 Cost of goods sold (1.980.000) Gross profit 1,320,000 Operating expenses (704,000 Depreciation (154,000) $ 0 0 $ 0 0 0 S 0 05 0 0 0 0 0 0 0 Net income $462,000 $ 0 $ 0 0 Statement of retained earnings: BOY retained earnings Net income Dividends Ending retained earnings Balance sheet: $1,732,500 462,000 (46,200) ( $2,148,300 0 0 0 0 $ Assets Cash 0 $939,180 765,600 05 0 0 Accounts receivable 0 983,400 1,818.960 0 0 0 $4.507,140 $ Inventory Property, plant, and equipment (PPE). net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC 0 $ 0 $ 0 0 0 0 $559,680 1,304,160 220,000 275,000 0 0 0 0 0 0 Retained earnings Total liabilities and equity 2.148,300 $4.507,140 s 0 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) - 0 Chg net monetary assets x (EOY - Avg exchange rate) Dividends x (EOY - Dividend exchange rate) Remeasurement loss $ 0 . Oo oo 0 $ 0