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 SAR100,000,000 investment, SAR50,000,000 was used to acquire plant assets (ten-year life) and SAR25,000,000 was used to acquire inventory. The remaining amount was initially held as cash by the subsidiary.

During 2016, the subsidiary reported net income of SAR10,000,000. Inventory purchases of SAR7,500,000 were made evenly during the year. It paid dividends of SAR5,000,000 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	SAR42,500,000
Cost of goods sold (1)	(20,000,000)
Depreciation expense (2)	(5,000,000)
Other cash expenses	(7,500,000)
Net income	SAR10,000,000

*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
Inventory
Plant assets
Capital
Dividends
Sales
Cost of goods sold
Depreciation expense
Other expenses
Other comprehensive (income) or loss		below
Net income

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
Net Income
Dividends
Exposed position, ending
Translation gainTranslation loss

(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
Inventory
Plant assets
Capital
Dividends
Sales
Cost of goods sold
Depreciation expense
Other expenses
Remeasurement (gain) or loss		below

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
Sales
Purchases
Cash expenses
Dividends
Exposed position, ending
Remeasurment gainRemeasurement loss