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Use the following information for questions 1 and 2: On January 1, 2020, Perfect Corporation (a U.S. company) paid Euro 300,000 to acquire all of

Use the following information for questions 1 and 2:

On January 1, 2020, Perfect Corporation (a U.S. company) paid Euro 300,000 to acquire all of the common stock of Snow Company, a German enterprise. There was no revaluation for this acquisition. During 2020, Snow purchased Euro 200,000 of inventories. Ending inventory items (FIFO cost) were purchased when the exchange was Euro 1 = US$1.22. Snow's equipment was purchased in 2015. Merchandise purchases, sales and other expenses occurred evenly over the year. Snow declared and paid dividends of Euro 30,000 on December 17, 2020.

Exchange rates were as follows:

The exchange rate on January 1, 2020, was Euro 1 = US$1.20

The exchange rate on May 1, 2020, was Euro 1 = US$1.25

The exchange rate on December 17, 2020, was Euro 1 = US$1.18

The exchange rate on December 31, 2020, was Euro 1 = US$1.23

Average exchange rate for 2020 was Euro 1 = US$1.21

  1. The functional currency of Snow was the Euro.

Re-measurement/translation of financial statements to U.S. Dollars, for the year ended December 31, 2020

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1. The functional currency of Snow was the Euro. Hemeasurement/translation of financial statements to U.S. Dollars, for the year ended December 31, 2020 Snow Company (German subsidiary) Euros Exchange rate U.S. Dollars Euro 1 = Income Statement Net sales 400,000 Cost of goods sold 220,000 Depreciation expense 10,000 Other expenses 50,000 Net income 120.000 Statement of Retained Earnings Retained earnings, 1/1/20 20,000 + Net income 120,000 - Dividends declared 30.000 Retained earnings, 12/31/20 110.000 Balance Sheet 1/1/20 12/31/20 Cash 220,000 330.000 Inventories (at FIFO cost) 50,000 30.000 Equipment (net) 80,000 70.000 Total 350,000 430.000 Accounts payable 30,000 20,000 Common stock 300,000 300,000 Retained earnings 20,000 110.000 Total 350,000 430,000 (a) Determine the remeasurement gain or loss/translation adjustment for 2020 by analyzing changes in exposed positions. You must show your calculations to receive credit. (b) Complete the above table for the remeasurement/translation of Snow's financial statement into U.S. dollars.2 . The functional currency of Snow was the US dollar. Remeasurement/translation of financial statements to U.S. Dollars, for the year ended December 31, 2020 Snow Company (German subsidiary) Euros Exchange rate U.S. Dollars Euro 1 = Income Statement Net sales 400,000 Cost of goods sold 220,000 Depreciation expense 10.000 Other expenses 50,000 Net income 120,000 Statement of Retained Earnings Retained earnings, 1/1/20 20.000 + Net income 120,000 - Dividends declared 30,000 Retained earnings, 12/31/20 110,000 Balance Sheet 1/1/20 12/31/20 Cash 220,000 330.000 Inventories (at FIFO cost) 50,000 30.000 Equipment (net) 80,000 70,000 Total 350,000 430,000 Accounts payable 30,000 20,000 Common stock 300,000 300.000 Retained earnings 20,000 110.000 Total 350,000 430,000 (a) Determine the remeasurement gain or loss/translation adjustment for 2020 by analyzing changes in exposed positions. You must show your calculations to receive credit. (b) Complete the above table for the remeasurement/translation of Snow's financial statement into U.S. dollars

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