Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 15,670 Notes payable NGN 20,060
Inventory 10,300 Common stock 20,060
Land 4,030 Retained earnings 10,030
Building 40,300
Accumulated depreciation (20,150 )
NGN 50,150 NGN 50,150

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 8,030,000 NGN on the note payable.
May 1 Sold entire inventory for 16,300,000 NGN on account.
June 1 Sold land for 6,030,000 NGN cash.
Aug. 1 Collected all accounts receivable.
Sept.1 Signed long-term note to receive 8,030,000 NGN cash.
Oct. 1 Bought inventory for 20,030,000 NGN cash.
Nov. 1 Bought land for 3,030,000 NGN on account.
Dec. 1 Declared and paid 3,030,000 NGN cash dividend to parent.
Dec. 31 Recorded depreciation for the entire year of 2,015,000 NGN.

The U.S dollar ($) exchange rates for 1 NGN are as follows:

2008 NGN 1 = $ 0.0051
2010 1 = 0.0045
August 1, 2016 1 = 0.0065
December 31, 2016 1 = 0.0067
February 1, 2017 1 = 0.0069
May 1, 2017 1 = 0.0071
June 1, 2017 1 = 0.0073
August 1, 2017 1 = 0.0077
September 1, 2017 1 = 0.0079
October 1, 2017 1 = 0.0081
November 1, 2017 1 = 0.0083
December 1, 2017 1 = 0.0085
December 31, 2017 1 = 0.0090
Average for 2017 1 = 0.0080

  1. Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2017?

  2. Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2017?

(Input all amounts as positive. Enter amounts in whole dollars.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And GRC Automation In SAP

Authors: Maxim Chuprunov

2013 Edition

3642434525, 978-3642434525

More Books

Students also viewed these Accounting questions

Question

3. Identify cultural universals in nonverbal communication.

Answered: 1 week ago