A statement of financial position and a statement of income are provided for Euro Subsidiary. The amounts shown are presented in Euros (E). You learn the following about Euro Subsidiary: . . The company's functional currency is the Euro. The parent company's reporting currency is the US dollar. Euro Subsidiary began business January 2015. Exchange rates are as follows (assume these are correct, don't look them up!). The chart shows the number of US dollars one Euro is worth, January each year 2015-2020, and June and December 31 (assumed) for 2020. So, on January 1, 2015, 1 Euro is worth $1.20. Do not look for more information on exchange rates, use only the ones provided in the table. Jan-15 1.20 Assume all of the common stock was issued/sold at the start Jan-16 1.08 of business in 2015. Assume all property, plant, and Jan-17 1.05 equipment, and the patents were purchased at the start of Jan-18 1.21 business 2015, too. Jan-19 You can reasonably assume that revenues and expenses 1.15 occurred evenly throughout the year 2020. Jan-20 1.12 You can also assume that retained earnings from earlier Jun-20 1.14 years was earned evenly over the years 2015-2019. Dec-20 1.22 Required for Part 1 A. Determine appropriate exchange rates to translate/remeasure (which is it?) from Euros to dollars. You will need to make some assumptions in doing this and I expect there will be different answers. B. Translate/remeasure (which is it?) Euro Subsidiary's statement of financial position and statement of income to U.S. dollars. I don't include a statement of comprehensive income, if you need to reflect something in that statement, just make a note of it. (There's another hint!) C. The end result should be a US dollar statement of financial position and statement of income, just those two (no cash flow, no statement of stockholders' equity). D. You must show me the rates you used, and if a calculation was involved, I must be able to review that calculation (calculating an average rate, for example, yet another hint). Using a formula in Excel is sufficient, as I can review the formula. I would prefer that you use formulas, by the way. Amounts are in Euros Statement of Financial Position Balance 12/31/2020 27,000,000 82,000,000 118,000,000 22,000,000 249,000,000 28,000,000 190,000,000 375,000,000 (165,000,000) 428,000,000 85,000,000 762,000,000 7 3 Cash 9 Accounts receivable 10 Inventory 11 Other current assets 12 13 Land 14 Building 15 Machinery 16 Accumulated depreciation 17 18 Patents, net of amortization 19 20 Total Assets 21 22 Accounts payable 23 Accrued expenses 24 Income taxes payable 25 26 27 Long-term debt 28 29 Common stock 30 Additional paid-in capital 31 Accumulated Currency Adjust. 32 Retained earnings 33 34 35 Total Liabilities and Equity 36 15,000,000 42,000,000 55,000,000 112,000,000 180,000,000 15,000,000 170,000,000 (19,000,000) 364,000,000 470,000,000 762,000,000 10 11 42 Amounts are in Euros Statement of Income Year ended 12/31/2020 43 1,050,000,000 45 Sales 46 47 Cost of Goods Sold 48 49 Gross Profit 580,000,000 470,000,000 50 51 Expenses: 52 Administrative 53 Selling and Marketing 54 Technical and Research 55 Amortization 56 Other (income) expense 57 Income before tax 58 59 Tax provision 60 61 Net Income 62 63 130,000,000 175,000,000 85,000,000 7,000,000 (7.200,000 80,200,000 22,100,000 58.100,000 A statement of financial position and a statement of income are provided for Euro Subsidiary. The amounts shown are presented in Euros (E). You learn the following about Euro Subsidiary: . . The company's functional currency is the Euro. The parent company's reporting currency is the US dollar. Euro Subsidiary began business January 2015. Exchange rates are as follows (assume these are correct, don't look them up!). The chart shows the number of US dollars one Euro is worth, January each year 2015-2020, and June and December 31 (assumed) for 2020. So, on January 1, 2015, 1 Euro is worth $1.20. Do not look for more information on exchange rates, use only the ones provided in the table. Jan-15 1.20 Assume all of the common stock was issued/sold at the start Jan-16 1.08 of business in 2015. Assume all property, plant, and Jan-17 1.05 equipment, and the patents were purchased at the start of Jan-18 1.21 business 2015, too. Jan-19 You can reasonably assume that revenues and expenses 1.15 occurred evenly throughout the year 2020. Jan-20 1.12 You can also assume that retained earnings from earlier Jun-20 1.14 years was earned evenly over the years 2015-2019. Dec-20 1.22 Required for Part 1 A. Determine appropriate exchange rates to translate/remeasure (which is it?) from Euros to dollars. You will need to make some assumptions in doing this and I expect there will be different answers. B. Translate/remeasure (which is it?) Euro Subsidiary's statement of financial position and statement of income to U.S. dollars. I don't include a statement of comprehensive income, if you need to reflect something in that statement, just make a note of it. (There's another hint!) C. The end result should be a US dollar statement of financial position and statement of income, just those two (no cash flow, no statement of stockholders' equity). D. You must show me the rates you used, and if a calculation was involved, I must be able to review that calculation (calculating an average rate, for example, yet another hint). Using a formula in Excel is sufficient, as I can review the formula. I would prefer that you use formulas, by the way. Amounts are in Euros Statement of Financial Position Balance 12/31/2020 27,000,000 82,000,000 118,000,000 22,000,000 249,000,000 28,000,000 190,000,000 375,000,000 (165,000,000) 428,000,000 85,000,000 762,000,000 7 3 Cash 9 Accounts receivable 10 Inventory 11 Other current assets 12 13 Land 14 Building 15 Machinery 16 Accumulated depreciation 17 18 Patents, net of amortization 19 20 Total Assets 21 22 Accounts payable 23 Accrued expenses 24 Income taxes payable 25 26 27 Long-term debt 28 29 Common stock 30 Additional paid-in capital 31 Accumulated Currency Adjust. 32 Retained earnings 33 34 35 Total Liabilities and Equity 36 15,000,000 42,000,000 55,000,000 112,000,000 180,000,000 15,000,000 170,000,000 (19,000,000) 364,000,000 470,000,000 762,000,000 10 11 42 Amounts are in Euros Statement of Income Year ended 12/31/2020 43 1,050,000,000 45 Sales 46 47 Cost of Goods Sold 48 49 Gross Profit 580,000,000 470,000,000 50 51 Expenses: 52 Administrative 53 Selling and Marketing 54 Technical and Research 55 Amortization 56 Other (income) expense 57 Income before tax 58 59 Tax provision 60 61 Net Income 62 63 130,000,000 175,000,000 85,000,000 7,000,000 (7.200,000 80,200,000 22,100,000 58.100,000