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, 2019, 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, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]):
Cash | NGN | 16,750 | Notes payable | NGN | 20,300 | |
Inventory | 11,500 | Common stock | 21,900 | |||
Land | 4,150 | Retained earnings | 10,950 | |||
Building | 41,500 | |||||
Accumulated depreciation | (20,750 | ) | ||||
NGN | 53,150 | NGN | 53,150 | |||
The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place:
2020 | |||
Feb. | 1 | Paid 8,150,000 NGN on the note payable. | |
May | 1 | Sold entire inventory for 17,500,000 NGN on account. | |
June | 1 | Sold land for 6,150,000 NGN cash. | |
Aug. | 1 | Collected all accounts receivable. | |
Sept. | 1 | Signed long-term note to receive 8,150,000 NGN cash. | |
Oct. | 1 | Bought inventory for 20,150,000 NGN cash. | |
Nov. | 1 | Bought land for 3,150,000 NGN on account. | |
Dec. | 1 | Declared and paid 3,150,000 NGN cash dividend to parent. | |
Dec. | 31 | Recorded depreciation for the entire year of 2,075,000 NGN. |
The U.S dollar ($) exchange rates for 1 NGN are as follows:
2011 | NGN 1 | = | $ | 0.0063 |
2013 | 1 | = | 0.0057 | |
August 1, 2019 | 1 | = | 0.0077 | |
December 31, 2019 | 1 | = | 0.0079 | |
February 1, 2020 | 1 | = | 0.0081 | |
May 1, 2020 | 1 | = | 0.0083 | |
June 1, 2020 | 1 | = | 0.0085 | |
August 1, 2020 | 1 | = | 0.0089 | |
September 1, 2020 | 1 | = | 0.0091 | |
October 1, 2020 | 1 | = | 0.0093 | |
November 1, 2020 | 1 | = | 0.0095 | |
December 1, 2020 | 1 | = | 0.0097 | |
December 31, 2020 | 1 | = | 0.0114 | |
Average for 2020 | 1 | = | 0.0104 | |
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Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2020?
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Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2020?
(Input all amounts as positive. Enter amounts in whole dollars.)
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