Translation of financial statements (2 years) Assume that your company owns a subsidiary operating in Australia. The subsidiary maintains its books in the Australian Dollar (AUD) as its functional currency. The subsidiary's financial statements (in AUD) for the prior and most recent years follow in part a. below. The relevant exchange rates for the SUS value of the Australian Dollar (AUD) are as follows: Year 50 54 S0.77 Prior Year Curre Borrate 095 EOV rate 5034 Avg rate 50.89 PPE purchase date rate LTD borrowing date rate Dividend rate 5085 Historical race common stock and APIO $1.03 50.73 10.73 SO 72 S103 a. Translate the subsidiary income statement statement of retained earning balance sheet, and statement of cash flows into SUS for both years (assume that the BOY Retained Earnings is 5600,000 at the beginning of the prior year), and the statement of cash flows for the second year. Round translated answers to the nearest whole number. Use negative signs with answers that are reductions (COGS, expenses, dividends, cash outflows, losses, etc.). Subsidiary Subsidiary Tea 1 Prior Year) in AUD) Translation Rate (ins) Income statement: 5000 000 $ Cost of goods sold 3.000.000 $ Gross profe (1,300,000 700,000 Statement of retained earnings BOY retained earnings Net income Dividends Ending retained in Balance sheet 635.00 $ 0 $ 636,800 $ 1,160,000 $ 1,490,000 $ 3,587,200 $ 6,874,000 Balance sheet: Assets Cash Accountleyeceivable Inventory Property, plant & equipment, net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment Total liabilities and equity 848,000 $ 1,976,000 $ 400,000 $ 500,000 $ 3,150,000 0 $ 0 O 0 0 6,874,000 Subsidiary (in AUD) Translation Rate Subsidiary (in $) 6,000,000 $ (3,600,000) 2,400,000 (1,560,000) 840,000 ol Year 2 (Current Year) Income statement: Sales Cost of goods sold Gross profit Operating expenses Net income Statement of retained earnings: BOY retained earnings Net income Dividends Ending retained earnings Balance sheet: Assets Cash Accounts receivable Inventory Property, plant & equipment, net Total assets 3,150,000 840,000 (84,000) 3,906,000 1,707,600 1,392,000 1,788,000 3,307,200 8,194,800 0 8,194,800 0 $ 1,017,600 2,371,200 400,000 500,000 3,906,000 8,194,800 Total assets Liabilities and stockholders' equity Current liabilities Long-tero liabilities Common stock APIC Retained earnings Cumulative translation adjustment Total liabilities and equity Statement of cash flows: Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash flows from operating activities Change in PPE, net Net cash flows from investing activities Change in long-term debt Dividends Net cash flows from financing activities Net change in cash Effect on exchange rate on cash Beginning cash Ending cash OOOOOOOOOOOOOO 840,000 (232,000) (298,000) 169,600 479,600 280,000 280,000 395,200 (84,000) 311,200 1,070,800 636,800 1,707,600 b. Compute the ending Cumulative Translation Adjustment directly for the current year. Note: Use negative signs with answers, when appropriate. Direct Computation of Translation Adjustment BOY Net assets x (EOY-BOY Exchange rates) $ Net income x (EOY - Average Exchange rates) Dividends x (EOY - Dividend Exchange rates) BOY Cumulative Translation Adjustment EOY Cumulative Translation Adjustment Translation of financial statements (2 years) Assume that your company owns a subsidiary operating in Australia. The subsidiary maintains its books in the Australian Dollar (AUD) as its functional currency The subsidiary's financial statements (in AUD) for the prior and most recent years follow in part a below. The relevant exchange rates for the $US value of the Australian Dollar (AUD) are as follows: Prior Year Current Year BOY rate EOY rate $0.84 $0.71 Ave rate 50.89 $0.77 PPE purchase date rate 30.73 LTD borrowing date rate 30.73 Dividend rate 50.85 50.72 Historical rate common stock and APIC) $1.03 $1.03 a. Translate the subsidiary's income statement, statement of retained earnings, balance sheet, and statement of cash flows into $US for both years (assume that the BOY Retained Earnings is $600,000 at the beginning of the prior year), and the statement of cash flows for the second year Round translated answers to the nearest whole number. Use negative signs with answers that are reductions (COGS. expenses, dividends, cash outflows, losses, etc.). Subsidiary Subsidiary Year 1 (Prior Year) (in AUD) Translation Rate (ins) Income statement Sales 5,000,000 $ Cost of goods sold 3,000,000) 5 Gross profil 2,000,000 Operating expenses (1,300,000) $ Net income 700.000 Statement of retained earnings: BOY retained earnings 2.520,000 Net income 700,000 Dividends (70,000) $ Ending retained earnings 3.150.000 Balance sheet: Assets 636 800 5 0 $ 636,800 $ 1,160,000 $ 1,490,000 $ 3,587,200 $ 6,874,000 Balance sheet: Assets Cash Accounts receivable Inventory Property, plant & equipment, net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment Total liabilities and equity 848,000 $ 1,976,000 $ 400,000 $ 500,000 $ 3,150,000 OOOOOO OOO 6,874,000 Subsidiary (in AUD) Translation Rate Subsidiary (in $) 6,000,000 $ (3,600,000) 2,400,000 (1,560,000) 840,000 OOOO Year 2 (Current Year) Income statement: Sales Cost of goods sold Gross profit Operating expenses Net income Statement of retained earnings: BOY retained earnings Net income Dividends Ending retained earnings Balance sheet: Assets Cash Accounts receivable Inventory Property, plant & equipment, net Total assets 3,150,000 840,000 (84,000) 3,906,000 TOOoo 1,707,600 1,392,000 1,788,000 3,307,200 8,194,800 OOOOO 3,307,200 8,194,800 1,017,600 2,371,200 400,000 500,000 3,906,000 8,194,800 Property, plant & equipment, net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment Total liabilities and equity Statement of cash flows: Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash flows from operating activities Change in PPE, net Net cash flows from investing activities Change in long-term debt Dividends Net cash flows from financing activities Net change in cash Effect on exchange rate on cash Beginning cash Ending cash 840,000 (232,000) (298,000) 169,600 479,600 280.000 280,000 395,200 (84,000) 311,200 1,070,800 636,800 1,707,600 b. Compute the ending Cumulative Translation Adjustment directly for the current year. Note: Use negative signs with answers, when appropriate. Direct Computation of Translation Adjustment BOY Net assets x (EOY-BOY Exchange rates) $ Net income x (EOY - Average Exchange rates) Dividends x (EOY - Dividend Exchange rates) BOY Cumulative Translation Adjustment EOY Cumulative Translation Adjustment