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.
Additional Information: (in thousands)
- Included in operating expenses is depreciation expense of CHF5,000.
- Plant and equipment of CHF30,000 was purchased for cash during 2020, when the exchange rate was $1.04. Depreciation of CHF2,000 was taken on this purchase during 2020.
- The ending inventory was purchased during the month of December.
- Revenues, purchases, and operating expenses other than depreciation occurred evenly during the year.
- Dividends were declared on December 31, 2020.
- Exchange rates for 2020 were as follows ($/CHF):
-
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.
(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.
(in thousands) Cash and receivables Inventories Plants and equipment, net Accounts and notes payable Common stock Retained earnings, January 1 Dividends Dr(Cr) December 31 January 1 CHF 30,000 CHF 25,000 55,000 60,000 175,000 150,000 (120,000) (125,000) (30,000) (30,000) (80,000) (80,000) 20,000 (500,000) 375,000 75,000 Sales Cost of sales Operating expenses Totals CHF O CHFO $1.03 January 1, 2020 Average for 2020 Average for December, 2020 December 31, 2020 1.06 1.08 1.09 Use negative signs with your Cr (credit balance) answers. Enter answers in thousands. Remeasured Trial Balance, December 31 2020 CHF Dr(Cr) $/CHF Cash, receivables CHF 30,000 1.09 $ Inventories 55,000 1.08 Plant and equipment, net 175,000 (1) below Accounts and notes payable (120,000) 1.09 $ Common stock (30,000) 1.03 Retained earnings, beginning (80,000) 1.03 Dividends 20,000 1.09 Sales (500,000) 1.06 Cost of sales 375,000 (2) below Operating expenses 75,000 (3) below Remeasurement (gain) or loss (4) below CHFO $ Dr(Cr) 3,270 X 59,400 150,000 x (130,800) (30,900) (82,400) 21,800 (530,000) (397,500) (74,200) * (5,200) * (5,100) * Do not use negative signs with any of your answers below. (1) Plant and equipment, net (in thousands) CHF 80 x $/CHF 1.03 1.04 Plant and equipment, net: purchased prior to 2020 CHF Plant and equipment, net: purchased during 2020 CHE $ 80 x 88 X 88 x 80 x 80 x Do not use negative signs with any of your answers below. $ (2) Cost of Sales (in thousands) Beginning inventory CHF 80 x 1.03 Purchases 80 X 1.08 x Ending inventory 88 x 1.08 Cost of sales CHE 88 X 88 x 80 x 6 x 80 x Do not use negative signs with any of your answers below. (3)Operating expenses (in thousands) CHF $ 88 x $ Depreciation (for P&E purchased prior to 2020) CHF Depreciation (for P&E purchased in 2020) Other operating expenses $/CHF 1.03 1.08 x 1.06 88 x 9 x 80 x 80 x 88 x 88 x Total CHE 80 x 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) CHE $/CHE Exposed position, beginning CHF 80 x 1.03 $ 88 x 80 X Sales 80 X Purchases 80 x Cash operating expenses Dividends Plant and equipment acquisition 88 X 80 x 8 x 1.06 1.06 1.06 1.09 1.08 x 8 x 88 x 80 x 80 x 9,999,999 x CHE 9 x 1.09 9 x Exposed position, ending Remeasurement loss 9 X Use negative signs with your Cr (credit balance) answers. - Enter answers in thousands. Translated Trial Balance December 31 2020 CHF Dr(Cr) $/CHF CHF 30,000 1.09 Cash, receivables $ Inventories 55,000 1.09 175,000 Plant and equipment, net Accounts and notes payable Common stock Retained earnings, beginning Dividends Sales Cost of sales Operating expenses Translation loss (gain) (120,000) (30,000) (80,000) 20,000 (500,000) 1.09 1.09 1.03 1.03 1.09 1.06 1.06 1.06 Dr(Cr) OX 9 X 9 X 9x 9 x 99 x 9 * 90 x 375,000 99 x 75,000 90 x 90 X see below CHEO 9 X 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) CHE $/CHE Exposed position, beginning CHF 99 x $ 90 X Net income Dividends 1.03 1.06 1.09 90 x 9* 9 x 9 X 99 X CHE 90 X 1.09 Exposed position, ending Translation gain 9 X 90 X (in thousands) Cash and receivables Inventories Plants and equipment, net Accounts and notes payable Common stock Retained earnings, January 1 Dividends Dr(Cr) December 31 January 1 CHF 30,000 CHF 25,000 55,000 60,000 175,000 150,000 (120,000) (125,000) (30,000) (30,000) (80,000) (80,000) 20,000 (500,000) 375,000 75,000 Sales Cost of sales Operating expenses Totals CHF O CHFO $1.03 January 1, 2020 Average for 2020 Average for December, 2020 December 31, 2020 1.06 1.08 1.09 Use negative signs with your Cr (credit balance) answers. Enter answers in thousands. Remeasured Trial Balance, December 31 2020 CHF Dr(Cr) $/CHF Cash, receivables CHF 30,000 1.09 $ Inventories 55,000 1.08 Plant and equipment, net 175,000 (1) below Accounts and notes payable (120,000) 1.09 $ Common stock (30,000) 1.03 Retained earnings, beginning (80,000) 1.03 Dividends 20,000 1.09 Sales (500,000) 1.06 Cost of sales 375,000 (2) below Operating expenses 75,000 (3) below Remeasurement (gain) or loss (4) below CHFO $ Dr(Cr) 3,270 X 59,400 150,000 x (130,800) (30,900) (82,400) 21,800 (530,000) (397,500) (74,200) * (5,200) * (5,100) * Do not use negative signs with any of your answers below. (1) Plant and equipment, net (in thousands) CHF 80 x $/CHF 1.03 1.04 Plant and equipment, net: purchased prior to 2020 CHF Plant and equipment, net: purchased during 2020 CHE $ 80 x 88 X 88 x 80 x 80 x Do not use negative signs with any of your answers below. $ (2) Cost of Sales (in thousands) Beginning inventory CHF 80 x 1.03 Purchases 80 X 1.08 x Ending inventory 88 x 1.08 Cost of sales CHE 88 X 88 x 80 x 6 x 80 x Do not use negative signs with any of your answers below. (3)Operating expenses (in thousands) CHF $ 88 x $ Depreciation (for P&E purchased prior to 2020) CHF Depreciation (for P&E purchased in 2020) Other operating expenses $/CHF 1.03 1.08 x 1.06 88 x 9 x 80 x 80 x 88 x 88 x Total CHE 80 x 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) CHE $/CHE Exposed position, beginning CHF 80 x 1.03 $ 88 x 80 X Sales 80 X Purchases 80 x Cash operating expenses Dividends Plant and equipment acquisition 88 X 80 x 8 x 1.06 1.06 1.06 1.09 1.08 x 8 x 88 x 80 x 80 x 9,999,999 x CHE 9 x 1.09 9 x Exposed position, ending Remeasurement loss 9 X Use negative signs with your Cr (credit balance) answers. - Enter answers in thousands. Translated Trial Balance December 31 2020 CHF Dr(Cr) $/CHF CHF 30,000 1.09 Cash, receivables $ Inventories 55,000 1.09 175,000 Plant and equipment, net Accounts and notes payable Common stock Retained earnings, beginning Dividends Sales Cost of sales Operating expenses Translation loss (gain) (120,000) (30,000) (80,000) 20,000 (500,000) 1.09 1.09 1.03 1.03 1.09 1.06 1.06 1.06 Dr(Cr) OX 9 X 9 X 9x 9 x 99 x 9 * 90 x 375,000 99 x 75,000 90 x 90 X see below CHEO 9 X 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) CHE $/CHE Exposed position, beginning CHF 99 x $ 90 X Net income Dividends 1.03 1.06 1.09 90 x 9* 9 x 9 X 99 X CHE 90 X 1.09 Exposed position, ending Translation gain 9 X 90 X
