a. Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 20207 b. Assuming the U.S.S is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2020?
a. Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 20207 b. Assuming the U.S.S is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
H2.
Transcribed Image Text:Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On
December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s):
Cash
Inventory
Land
Building
Accumulated
depreciation
2011
2013
August 1, 2019
December 31,
2019
February 1, 2020
May 1, 2020
June 1, 2020
August 1, 2020
September 1,
2020
NGN 16,790 Notes payable
Common stock
Retained.
11,900
earnings
The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock
in 2011. During 2020, the following transactions took place:
October 1, 2020
November 1, 2020
December 1, 2020
December 31,
2020
Average for 2020
4,190
41,900
(20,950)
NGN 53,830
2020
Feb. 1 Paid 8,190,000 NGN on the note payable.
May 1 Sold entire inventory for 17,900,000 NGN on account.
June 1 Sold land for 6,190,000 NGN cash.
Aug. 1 Collected all accounts receivable.
Sept. 1 Signed long-term note to receive 8,190,000 NGN cash.
Oct. 1 Bought inventory for 20,190,000 NGN cash..
Nov. 1 Bought land for 3,190,000 NGN on account.
Dec. 1 Declared and paid 3,190,000 NGN cash dividend to parent.
Dec.31 Recorded depreciation for the entire year of 2,095,000 NGN.
The US dollar ($) exchange rates for 1 NGN are as follows:
a
b.
NGN
= $0.0067
NGN20,380
22,300
11,150
1
1 =
1
NGN53,830
0.0061
0.0081
1 =
0.0083
1 =
0.0085
1 = 0.0087
1
0.0089
1 =
0.0093
1 =
0.0095
1
1=
0.0097
0.0099
0.0101
1 =
1 = 0.0122
1 = 0.0112
a. Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for
2020?
b. Assuming the U.S.S is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely
for 2020?
(Input all amounts as positive. Enter amounts in whole dollars.)
translation
adjustment
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