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Required: Translate Gramado Cz denominated financial statements into USD, assuming that USD is the primary currency that Gramado uses in its day-to-day operations. Gramado Company
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Translate Gramado Cz denominated financial statements into USD, assuming that USD is the primary currency that Gramado uses in its day-to-day operations.
Gramado Company was created as a wholly owned subsidiary of Porto Corporation (a US based company) on January 1, 2020. On that date, Porto invested $50,000 in Gramado's capital stock. Given the exchange rate on that date of 0.84 Cruzeiro (Cz) per USD. Gramado's opening balance sheet (in Cz) was as follows: Cz Balance Sheet January 1, 2020 Cz 20,000 22,000 Capital Stock 42,000 Total liabilities and Equity Cash Inventory Total Assets 42,000 42,000 Relevant USD exchange rates for the Cz for Years 1 and 2 are as follows: 0.84 Cz/$ 0.80 Cz/$ 0.82 Cz/$ January 1, 2020 Average for 2020 Rate when PPE were acquired and long-term debt was incurred on Jan 10, 2020 Rate when capital was increased Feb 25, 2020 Rate when dividends were declared. Dec 1, 2020 Average for the month of December 2020 December 31, 2020 0.83 Cz/$ 0,78 Cz/$ 0.76 Cz/$ 0.75 Cz/$ Gramado's Cz denominated financial statements for the year ended December 31, 2020 are as follows: Income statement 2020 Cz Sales 540,000 COGS (310,000) Selling and administrative expenses (93,000) Depreciation expense (10,000) Interest expense (5,000) Income before tax 122,000 Income taxes (40,000) Net income 82,000 Statement of Retained Earnings 2020 Cz Retained earnings, 1/1/2020 0 Net income 82,000 Dividends (declared on 1/12/2020) (20,000) Retained earnings, 12/31/2020 62,000 Balance sheet December 31, 2020 Cash A/R Inventory (1) Plant and equipment Less: acc. depn Total asset Account payable Long-term Debt Capital stock (2) Retained earnings, 12/31/2020 Total liabilities and stockholders' equity Cz 30,000 20,000 72,000 100,000 (10,000) 212,000 30,000 65,000 55,000 62,000 212,000 Additional information: (1) Inventory is carried at FIFO cost. Opening inventory was purchased on Jan 1, 2020. Ending inventory was acquired evenly throughout the month of December. (2) 13,000 Cz additional capital was raised on Feb 25, 2020Step by Step Solution
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