Question
Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary
Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000's)):
Cash | NGN | 16,240 | Notes payable | NGN | 20,180 | |
Inventory | 10,900 | Common stock | 21,000 | |||
Land | 4,090 | Retained earnings | 10,500 | |||
Building | 40,900 | |||||
Accumulated depreciation | (20,450 | ) | ||||
NGN | 51,680 | NGN | 51,680 | |||
The subsidiary acquired the inventory on August 1, 2016, and the land and building in 2010. It issued the common stock in 2008. During 2017, the following transactions took place:
2017 | |
Feb. 1 | Paid 8,090,000 NGN on the note payable. |
May 1 | Sold entire inventory for 16,900,000 NGN on account. |
June 1 | Sold land for 6,090,000 NGN cash. |
Aug. 1 | Collected all accounts receivable. |
Sept.1 | Signed long-term note to receive 8,090,000 NGN cash. |
Oct. 1 | Bought inventory for 20,090,000 NGN cash. |
Nov. 1 | Bought land for 3,090,000 NGN on account. |
Dec. 1 | Declared and paid 3,090,000 NGN cash dividend to parent. |
Dec. 31 | Recorded depreciation for the entire year of 2,045,000 NGN. |
The U.S dollar ($) exchange rates for 1 NGN are as follows:
2008 | NGN 1 | = | $ | 0.0057 |
2010 | 1 | = | 0.0051 | |
August 1, 2016 | 1 | = | 0.0071 | |
December 31, 2016 | 1 | = | 0.0073 | |
February 1, 2017 | 1 | = | 0.0075 | |
May 1, 2017 | 1 | = | 0.0077 | |
June 1, 2017 | 1 | = | 0.0079 | |
August 1, 2017 | 1 | = | 0.0083 | |
September 1, 2017 | 1 | = | 0.0085 | |
October 1, 2017 | 1 | = | 0.0087 | |
November 1, 2017 | 1 | = | 0.0089 | |
December 1, 2017 | 1 | = | 0.0091 | |
December 31, 2017 | 1 | = | 0.0102 | |
Average for 2017 | 1 | = | 0.0092 | |
Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2017? I got $133,578 amd it was wrong
Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2017? For this, I got 5,870 and it was incorrect too.
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