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Translation and Remeasurement of Subsidiary Trial Balance Costsave Corporation, a U.S. company, acquired Denner, a discount supermarket chain in Switzerland, on January 1, 2020. Denner

Translation and Remeasurement of Subsidiary Trial Balance

Costsave Corporation, a U.S. company, acquired Denner, a discount supermarket chain in Switzerland, on January 1, 2020. Denner is a subsidiary of Costsave, and its results are consolidated with those of Costsave in Costsaves financial statements. Denners trial balances for January 1 and December 31, 2020, in Swiss francs (CHF) appear below.

Dr(Cr)
(in thousands) December 31 January 1
Cash and receivables CHF 30,000 CHF 25,000
Inventories 55,000 60,000
Plants and equipment, net 175,000 150,000
Accounts and notes payable (120,000) (125,000)
Common stock (30,000) (30,000)
Retained earnings, January 1 (80,000) (80,000)
Dividends 20,000 --
Sales (500,000) --
Cost of sales 375,000 --
Operating expenses 75,000 --
Totals CHF 0 CHF 0

Additional Information: (in thousands)

  1. Included in operating expenses is depreciation expense of CHF5,000.
  2. Plant and equipment of CHF30,000 was purchased for cash during 2020, when the exchange rate was $1.04. Depreciation of CHF2,000 was taken on this purchase during 2020.
  3. The ending inventory was purchased during the month of December.
  4. Revenues, purchases, and operating expenses other than depreciation occurred evenly during the year.
  5. Dividends were declared on December 31, 2020.
  6. Exchange rates for 2020 were as follows ($/CHF):
January 1, 2020 $1.03
Average for 2020 1.06
Average for December, 2020 1.08
December 31, 2020 1.09

It is now December 31, 2020, and Denners accounts must be converted to U.S. dollars in preparation for consolidation.

(a) Denners functional currency is the U.S. dollar. Prepare Denners remeasured December 31, 2020 trial balance, and a schedule showing the computation of the remeasurement gain or loss for 2020.

  • Use negative signs with your Cr (credit balance) answers.
  • Enter answers in thousands.

Remeasured Trial Balance, December 31 2020
CHF Dr(Cr) $/CHF $ Dr(Cr)
Cash, receivables CHF 30,000 Answer Answer
Inventories 55,000 Answer Answer
Plant and equipment, net 175,000 (1) below Answer
Accounts and notes payable (120,000) Answer Answer
Common stock (30,000) Answer Answer
Retained earnings, beginning (80,000) Answer Answer
Dividends 20,000 Answer Answer
Sales (500,000) Answer Answer
Cost of sales 375,000 (2) below Answer
Operating expenses 75,000 (3) below Answer
Remeasurement (gain) or loss -- (4) below Answer
CHF 0 Answer

Do not use negative signs with any of your answers below.

(1) Plant and equipment, net (in thousands)
CHF $/CHF $
Plant and equipment, net: purchased prior to 2020 Answer Answer Answer
Plant and equipment, net: purchased during 2020 Answer Answer Answer
Answer Answer

Do not use negative signs with any of your answers below.

(2) Cost of Sales (in thousands)
Beginning inventory Answer Answer Answer
Purchases Answer Answer Answer
Ending inventory Answer Answer Answer
Cost of sales Answer Answer

Do not use negative signs with any of your answers below.

(3)Operating expenses (in thousands)
CHF $/CHF $
Depreciation (for P&E purchased prior to 2020) Answer Answer Answer
Depreciation (for P&E purchased in 2020) Answer Answer Answer
Other operating expenses Answer Answer Answer
Total 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.

(4) Remeasurement Gain/Loss Schedule (in thousands)
CHF $/CHF $
Exposed position, beginning Answer Answer Answer
Sales Answer Answer Answer
Purchases Answer Answer Answer
Cash operating expenses Answer Answer Answer
Dividends Answer Answer Answer
Plant and equipment acquisition Answer Answer Answer
Answer
Exposed position, ending Answer Answer Answer
AnswerRemeasurement gainRemeasurement loss Answer

(b) Denners functional currency is the Swiss franc. Prepare Denners translated December 31, 2020 trial balance, and a schedule showing the computation of the translation gain or loss for 2020.

  • Use negative signs with your Cr (credit balance) answers.
  • Enter answers in thousands.

Translated Trial Balance December 31 2020
CHF Dr(Cr) $/CHF $ Dr(Cr)
Cash, receivables CHF 30,000 Answer Answer
Inventories 55,000 Answer Answer
Plant and equipment, net 175,000 Answer Answer
Accounts and notes payable (120,000) Answer Answer
Common stock (30,000) Answer Answer
Retained earnings, beginning (80,000) Answer Answer
Dividends 20,000 Answer Answer
Sales (500,000) Answer Answer
Cost of sales 375,000 Answer Answer
Operating expenses 75,000 Answer Answer
Translation loss (gain) see below Answer
CHF 0 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.

Translation Gain/Loss Schedule (in thousands)
CHF $/CHF $
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

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