Translation of financial statements Assume that your company owns a subsidiary operating in France. The subsidiary conducts most of its business activities in the European Economic Union and maintains its books in the Euro as its functional currency. The subsidiary's financial statements (int) for the most recent year follow in part a. below The relevant exchange rates (s:1) are as follows: BOY rate $1.17 EOY rate $1.22 Avg rate 51.19 PPE purchase date rate $1.20 LTD borrowing date rate $1.20 Dividend rate 51.21 Historical rate (common stock and APIC) 50.98 For both parts a. and b. below, use a negative sign with answers to indicate a reduction a. Translate the subsidiary's income statement statement of retained earnings, balance sheet, and statement of cash flows into SUS (assume that the BOY Retained Earnings is 5553,612). Translation In Income Statement In Euros Rate US Dollars Sales 61.350.000 05 0 Cost of foods sold (810.000 0 0 Gross profit 540,000 0 Operating expenses 51.000) 0 0 Net income 189.000 5 0 Statement of Retained Earnings Loretained earnings C700750 $ 0 Net Income 189.000 0 Didends (18.000) 0 EOV retained earnings 173.050 0 Balance Sheet: Assets Cash 34210 05 Accounts recevable 311.200 Inventory 402 300 Property.plant and equipment PPE.net 744120 Total assets 61.343,830 s Lalities and stockholders equity Old 05 0 Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings 228.960 533,520 90,000 112.500 878,850 0 0 O O O O OOO 1.843,830 5 0$ 0 OOOO 0 Total liabilities and equity Statement of Cash Flows: Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities Change in PPE.net Net cash from investing activities Change in long-term debt Dividends Net cash flows from financing activities Net change in cash Effect of exchange rate on cash Beginning cash Ending cash 189.000 (52.200) (67.050) 38.160 107.910 (69,120) (69,120) 88.920 (18.900) 70,020 108,810 OOOOO 0 OO 0 0 0 0 275,400 384.210 0 0 $ OOO b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY bal Direct computation of translation adjustment 5 Net Income (EOY - Average exchange rate) e OOO OOO a EOY cumulative translation adjustment $ Check