This question is fully answered but I want to know how to calculate the net assets beginning of the year in part b.

Could you explain the formula of the net assets beginning of the year in part B, which the answer is 909250.

Thank you

Question: Translation of financial statements Assume that your company ... See this question in the app (1 bookmark) Translation of financial statements Assume that your company owns a subsidiary operating in Canada. The subsidiary maintains its books in the Canadian Dollar (CAD) as its functional currency. Following are the subsidiary's financial statements in CAD) for the most recent year: The relevant exchange rates ($:CAD) are as follows: BOY rate $0.70 EOY rate $0.76 Avg. rate $0.73 PPE purchase date rate $0.74 LTD borrowing date rate $0.74 Dividend rate $0.75 Historical rate (common stock and APIC) $0.60 For both parts a. and b. below, use a negative sign with answers to indicate a reduction. b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $(37,237). Round all answers to the nearest dollar. $ Direct computation of translation adjustment: BOY net assets x (EOY - BOY exchange rates) Net income x (EOY - Average exchange rate) Dividends x (EOY - Dividend exchange rate) BOY cumulative translation adjustment EOY cumulative translation adjustment $ a. Translate the subsidiary's income statement, statement of reunited earnings, balance sheet, and statement of cash flows into $US (assume that the BOY retained earnings are $553.612). Income Statement CAD Rate US Dollar Sales 1,350,000 0.73 985,500 Cost of goods sold -810,000 0.73 -591,300 Gross profit 540,000 394,200 Operating expenses -351,000 0.73 -256,230 Net income 189,000 137,970 Statement of Retained Earnings CAD Rate US Dollar BOY Retained earnings 706,750 553,612 Net income 189,000 0.73 137,970 Dividends -18,900 0.75 -14,175 Ending retained earnings 876,850 677,407 Balance Sheet Assets CAD Rate US Dollar Cash 384,210 0.76 291,999.60 Accounts receivable 313,200 0.76 238,032.00 Inventory 402,300 0.76 305,748.00 Property, plant, and equipment (PPE), net 744,120 0.76 565,531.20 Total assets 1,843,830 1,401,310.80 Liabilities and stockholders' equity Current liabilities 228,960 0.76 174,009.60 Long-term. liabilities 533,520 0.76 405,475.20 Common stock 90,000 0.6 54,000 APIC 112,500 0.6 67,500 Retained earnings 878,850 see schedule 677,407 Cumulative translation adjustment 22,919 Total liabilities and equity 1,843,830 1,401,310.80 Statement of Cash Flows CAD Rate US Dollar Net income 189,000 0.73 137,970.00 Change in accounts receivable -52,500 0.73 -38,325.00 Change in inventories -67,050 0.73 -48,946.50 Change in current liabilities 38,160 0.73 27,856.80 Net cash from operating activities 107,610 78,555.30 Change in PPE, net -69,120 0.74 -51,148.80 Net cash from investing activities -69,120 -51,148.80 Change in long-term debt 88,920 0.74 65,800.80 Dividends -18,900 0.75 -14,175.00 Net cash from financing activities 70,000 51,625.80 Net change in cash 108,810 79,032.30 Effect of exchange rate on cash -178,251.90 Beginning cash 275,400 0.7 192,780.00 Ending cash 384,210 0.76 291,999.60 b. Compute the ending cumulative translation adjustment directly, assuming a BOY balance of $(37, 237). Proof of Translation Adjustment CAD Rate US Dollar Net assets at beginning of year 909,250 0.7 636,475 Adjustment for changes in net asset position during year: Net income for year 189,000 0.73 137,970 Dividends paid -18,900 0.75 -14,175 Net assets translated at: Rates during year 1,079,350 760,270 Rates at end of year 1,079,350 0.76 820,306.00 60,036.00 Change in other comprehensive income translation adjustment during year net increase -37,237.00 Accumulated other comprehensive income translation adjustment January 1 22,799.00 Change in other comprehensive income translation adjustment December 31 22,919