temporal method

You work for a US company that has a subsidiary in Euro You work for an American company that has a branch in Italy pe. The functional currency of the subsidiary is Euro. The companys total assets and total liabilities as at 31 December 2017 are EUR 200 million and EUR 140 million. Common stock is worth EUR 20 million (equivalent to USD 25 million when it was raised) and the rest represents retained earnings. USD equivalent

balance of retained earnings was USD 32 million last year. Net income for the year is EUR 15 million which is earned equally throughout the year. Average exchange rate that prevailed over the year was 0.82/$ and the closing exchange rate is 0.85/$.

Note: 50% of assets and liabilities are non-monetary items which were acquired when the exchange rate was 0.80/$.

Using the Current method Translate all listed accounts below.

tem Euro in millions	Exchange Rate	USD in millions	Calculation
Monetary assets 100
Non-monetary assets 100
Total assets 200
Monetary liabilities 70
Non-monetary liabilities 70
Total liabilities 140
Common Stock 20
Retained Earnings 40
Total liabilities plus equity 200
Net income before FX gain or loss 15
FX gain or loss
Net income after FX gain or loss