If the euro is chosen as the Ukraine subsidiary’s functional currency, Eurexim will translateits fi xed assets using the:A . average rate for the reporting period.B . rate in eff ect when the assets were purchased.C . rate in eff ect at the end of the reporting period.

A translation adjustment must be calculated and disclosed when financial statements of a foreign subsidiary are translated into the parent’s reporting currency. How is this figure computed, and where is the amount reported in the financial statements?

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 2020 Feb. 1 Paid 8,120,000 NGN on the note payable. May 1 Sold entire inventory for 17,200,000 NGN on account. June 1 Sold land for 6,120,000 NGN cash. 2011 2013 NGN 16,420 11, 200 4, 120 41,200 (20,600) NGN 52,340 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: Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,120,000 NGN cash. Oct. 1 Bought inventory for 20, 120,000 NGN cash. Nov. 1 Bought land for 3,120,000 NGN on account. Dec. 1 Declared and paid 3,120,000 NGN cash dividend to parent. Dec.31 Recorded depreciation for the entire year of 2,060,000 NGN.…

Initially, a foreign currency transaction shall be recorded by applying The spot exchange rate at the date of settlement of the transaction The closing rate at the end of the period The spot exchange rate at the date of transaction The average exchange rate during the year

On January 1, 2024, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2024 financial statements stated in Swiss francs are given below. GRANT MANAGEMENT CONSULTANTS Comparative Balance Sheets January 1 and December 31, 2024 Direct exchange rates for Swiss franc are: Required: A. Translate the year-end balance sheet and income statement of foreign subsidiary using the current rate method of translation. B. Prepare a schedule to verify the translation adjustment. Cash and Receivables Net Property, Plant, and Equipment 40,000 37,000 60,000 92,000 30,000 32,000 20,000 20,000 10,000 40,000 60,000 92,000 Totals Accounts and Notes Payable Common Stock Retained Earnings Totals GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2024 Jan. 1 Dec. 31 20,000 55,000 Revenues 75,000 Operating…

Forex: Translation and RemeasurementThe following assets are held by a subsidiary in a foreign country:   1. At what amount should be reported as total assets if the financial statement is to be translated as of Jan. 31?2. At what amount should be reported as total assets if the financial statement is to be remeasured as of Jan. 31?

How to translate a foreign subsidiary’s financial statements into its parent’s reporting currency using the current rate method and calculate the related translation adjustment?