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 Thode's initial SAR240,000,000 investment, SAR120,000,000 was used to acquire plant assets (ten-year life) and SAR60,000,000 was used to acquire inventory. The remaining amount was initially held as cash by the subsidiary. During 2016, the subsidiary reported net income of SAR24,000,000. Inventory purchases of SAR18,000,000 were made evenly during the year. It paid dividends of SAR12,000,000 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: *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 subsidiary's preclosing trial balance at December 31, 2016, and prepare a schedule calculating the subsidiary's translation gain or loss for 2016. - Use negative signs with your Cr (credit balance) answers, in the PDr(Cr) and $Dr(Cr) columns only. - Enter answers using all zeros (do not abbreviate answers to millions or thousands). 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). (b) Assuming the functional currency is the U.S. dollar, remeasure the subsidiary's preclosing trial balance at December 31, 2016, and prepare a schedule calculating the subsidiary's remeasurement gain or loss for 2016 . - Use negative signs with your Cr (credit balance) answers, in the PDr(Cr) and $Dr(Cr) columns only. - Enter answers using all zeros (do not abbreviate answers to millions or thousands). 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). Please answer all parts of the
