Question

Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000's)):

Cash	NGN	16,400		Notes payable	NGN	20,200
Inventory		11,000		Common stock		21,200
Land		4,100		Retained earnings		10,600
Building		41,000
Accumulated depreciation		(20,500	)
	NGN	52,000			NGN	52,000

The subsidiary acquired the inventory on August 1, 2016, and the land and building in 2010. It issued the common stock in 2008. During 2017, the following transactions took place:

2017
Feb. 1	Paid 8,100,000 NGN on the note payable.
May 1	Sold entire inventory for 17,000,000 NGN on account.
June 1	Sold land for 6,100,000 NGN cash.
Aug. 1	Collected all accounts receivable.
Sept.1	Signed long-term note to receive 8,100,000 NGN cash.
Oct. 1	Bought inventory for 20,100,000 NGN cash.
Nov. 1	Bought land for 3,100,000 NGN on account.
Dec. 1	Declared and paid 3,100,000 NGN cash dividend to parent.
Dec. 31	Recorded depreciation for the entire year of 2,050,000 NGN.

The U.S dollar ($) exchange rates for 1 NGN are as follows:

2008	NGN 1	=	$	0.0058
2010	1	=		0.0052
August 1, 2016	1	=		0.0072
December 31, 2016	1	=		0.0074
February 1, 2017	1	=		0.0076
May 1, 2017	1	=		0.0078
June 1, 2017	1	=		0.0080
August 1, 2017	1	=		0.0084
September 1, 2017	1	=		0.0086
October 1, 2017	1	=		0.0088
November 1, 2017	1	=		0.0090
December 1, 2017	1	=		0.0092
December 31, 2017	1	=		0.0104
Average for 2017	1	=		0.0094

A. Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2017?

B. Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2017?

(Input all amounts as positive. Enter amounts in whole dollars.)

Answer 1

			Trail Balance
			$ in 000's				$ in 000's
Particulars	Debit	Rate	Amount	Particulars	Credit	Rate	Amount
Inventory Opening	11000	0.0072	79.2	Sales	17000	0.0078	132.6
Building	41000	0.0052	213.2	Notes Payable	12100	0.0104	125.84
Purchases	20100	0.0088	176.88	Common stock	21200	0.0104	220.48
Land	3100	0.009	27.9	Long Term Note	8100	0.0104	84.24
Cash (Working Note)	13200	0.0104	137.28	Retained Earnings (WN)	7450	0.0094	70.03
Accumulated Dep	-22550	0.0094	-211.97
Translation Adjustment			210.7
	65850		633.19		65850		633.19
Cash				Retained Earnings
Opening	16400			Opening	10600
Sale of Land	6100			Profit on sale of Land	2000
Payment from Debtors	17000
Long Term Note	8100			Less
	47600			Dividend	-3100
Less				Depreciation	-2050
Inventory	20100			Closing Balance	7450
Land	3100
Dividend	3100
Notes Payable	8100
Closing Balance	13200