Translated and Remeasured Trial Balances

The Thode Company established a wholly-owned subsidiary in Saudi Arabia on January 1, 2016, when the exchange rate was $0.30/riyal (SAR). Of Thodes initial SAR360,000,000 investment, SAR180,000,000 was used to acquire plant assets (ten-year life) and SAR90,000,000 was used to acquire inventory. The remaining amount was initially held as cash by the subsidiary.

During 2016, the subsidiary reported net income of SAR36,000,000. Inventory purchases of SAR27,000,000 were made evenly during the year. It paid dividends of SAR18,000,000 on September 30, when the exchange rate was $0.255/SAR. No other transactions occurred between the subsidiary and the parent. The subsidiary's condensed income statement appears below:

Sales	SAR153,000,000
Cost of goods sold	(72,000,000)*
Depreciation expense	(18,000,000)**
Other cash expenses	(27,000,000)
Net income	SAR36,000,000

*Assume a FIFO inventory flow assumption. **Relates solely to plant assets acquired on January 1, 2016. The average rate during the year was $0.265/SAR. On the balance sheet date, it was $0.25/SAR.

(a) Assuming the functional currency is the riyal, translate the subsidiarys preclosing trial balance at December 31, 2016, and prepare a schedule calculating the subsidiarys translation gain or loss for 2016.

• Use negative signs with your Cr (credit balance) answers, in the P Dr(Cr) and $ Dr(Cr) columns only.
• Enter answers using all zeros (do not abbreviate answers to millions or thousands).

December 31, 2016 Translated Trial Balance	SAR Dr (Cr)	$/SAR	$ Dr (Cr)
Cash	Answer	Answer	Answer
Inventory	Answer	Answer	Answer
Plant assets	Answer	Answer	Answer
Capital	Answer	Answer	Answer
Dividends	Answer	Answer	Answer
Sales	Answer	Answer	Answer
Cost of goods sold	Answer	Answer	Answer
Depreciation expense	Answer	Answer	Answer
Other expenses	Answer	Answer	Answer
Other comprehensive (income) or loss		below	Answer
Net income	Answer		Answer

Instructions for Translation Gain/Loss Schedule:

1. Use negative signs with answers to indicate a negative exposed position balance.
2. Use negative signs with answers to indicate an amount that reduces the exposed position balance.
3. Using the drop-down menu, select the appropriate answer to indicate a translation gain or translation loss.
4. Do not use a negative sign with your translation gain or translation loss answer.
5. Enter answers using all zeros (do not abbreviate to millions or thousands).

Translation Gain/Loss Schedule
	SAR	$/SAR	$
Exposed position, beginning	Answer	Answer	Answer
Net Income	Answer	Answer	Answer
Dividends	Answer	Answer	Answer
			Answer
Exposed position, ending	Answer	Answer	Answer
AnswerTranslation gainTranslation loss			Answer

(b) Assuming the functional currency is the U.S. dollar, remeasure the subsidiarys preclosing trial balance at December 31, 2016, and prepare a schedule calculating the subsidiarys remeasurement gain or loss for 2016.

• Use negative signs with your Cr (credit balance) answers, in the P Dr(Cr) and $ Dr(Cr) columns only.
• Enter answers using all zeros (do not abbreviate answers to millions or thousands).

December 31, 2016 Remeasured Trial Balance	SAR Dr (Cr)	$/SAR	$ Dr (Cr)
Cash	Answer	Answer	Answer
Inventory	Answer		Answer
Plant assets	Answer	Answer	Answer
Capital	Answer	Answer	Answer
Dividends	Answer	Answer	Answer
Sales	Answer	Answer	Answer
Cost of goods sold	Answer	Answer	Answer
Depreciation expense	Answer	Answer	Answer
Other expenses	Answer	Answer	Answer
Remeasurement (gain) or loss		below	Answer
	Answer		Answer

Instructions for Remeasurement Gain/Loss Schedule:

1. Use negative signs with answers to indicate a negative exposed position balance.
2. Use negative signs with answers to indicate an amount that reduces the exposed position balance.
3. Using the drop-down menu, select the appropriate answer to indicate a remeasurement gain or remeasurement loss.
4. Do not use a negative sign with your remeasurement gain or remeasurement loss answer.
5. Enter answers using all zeros (do not abbreviate to millions or thousands).

Remeasurement Gain/Loss Schedule
	SAR	$/SAR	$
Exposed position, beginning	Answer	Answer	Answer
Sales	Answer	Answer	Answer
Purchases	Answer	Answer	Answer
Cash expenses	Answer	Answer	Answer
Dividends	Answer	Answer	Answer
			Answer
Exposed position, ending	Answer	Answer	Answer
AnswerRemeasurment gainRemeasurement loss			Answer