In: Accounting
Translation of financial statements Assume that your company owns a subsidiary operating in Canada. The subsidiary maintains its books in the Canadian Dollar (CAD) as its functional currency. Following are the subsidiary’s financial statements (in CAD) for the most recent year:
(in CAD) | (in CAD) | (in CAD) | |||||
---|---|---|---|---|---|---|---|
Income Statement: | Balance Sheet: | Statement of Cash Flows: | |||||
Sales | 1,350,000 | Assets | Net Income | 189,000 | |||
Cost of Goods Sold | (810,000) | Cash | 384,210 | Change in accounts receivable | (52,500) | ||
Gross profit | 540,000 | Accounts receivable | 313,200 | Change in inventories | (67,050) | ||
Operating expenses | (351,000) | Inventory | 402,300 | Change in current liabilities | 38,160 | ||
Net income | 189,000 | Property, plant, and | Net cash from operating activities | 107,910 | |||
equipment (PPE), net | 744,120 | ||||||
Total assets | €1,843,830 | ||||||
Statement of retained earnings: | Change in PPE, net | (69,120) | |||||
BOY ret. earnings | 708,750 | Liabilities and stockholders’ equity | Net cash from investing activities | (69,120) | |||
Net income | 189,000 | Curr. liabilities | 228,960 | ||||
Dividends | (18,900) | L-T liabilities | 533,520 | Change in long-term debt | 88,920 | ||
EOY ret. earnings | 878,850 | Common stock | 90,000 | Dividends | (18,900) | ||
APIC | 112,500 | Net cash from financing activities | 70,020 | ||||
Ret. earnings | 878,850 | ||||||
Total liabilities and equity | 1,843,830 | Net change in cash | 108,810 | ||||
Beginning cash | 275,400 | ||||||
Ending cash | 384,210 |
The relevant exchange rates ($:CAD) are as follows:
BOY rate | $0.70 |
EOY rate | $0.76 |
Avg. rate | $0.73 |
PPE purchase date rate | $0.74 |
LTD borrowing date rate | $0.74 |
Dividend rate | $0.75 |
Historical rate (common stock and APIC) | $0.60 |
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 $US (assume that the BOY Retained Earnings is $553,612).
Round all answers in the "in US Dollars" column to the nearest dollar.
Income Statement: |
In CADs |
Translation Rate |
In US Dollars |
---|---|---|---|
Sales | 1,350,000 | $Answer | $Answer |
Cost of goods sold | (810,000) | $Answer | Answer |
Gross profit | 540,000 | Answer | |
Operating expenses | (351,000) | $Answer | Answer |
Net income | 189,000 | $Answer | |
Statement of Retained Earnings: | |||
BOY ret. earnings | 708,750 | $Answer | |
Net income | 189,000 | Answer | |
Dividends | (18,900) | $Answer | Answer |
EOY ret. earnings | 878,850 | $Answer | |
Balance Sheet: | |||
Assets | |||
Cash | $384,210 | $Answer | $Answer |
Accounts receivable | 313,200 | $Answer | Answer |
Inventory | 402,300 | $Answer | Answer |
Property, plant, and equipment (PPE), net | 744,120 | $Answer | Answer |
Total assets | $1,843,830 | $Answer | |
Liabilities and stockholders' equity | |||
Current liabilities | $228,960 | Answer | $Answer |
L-T liabilities | 533,520 | Answer | Answer |
Common stock | 90,000 | Answer | Answer |
APIC | 112,500 | Answer | Answer |
Ret. earnings | 878,850 | Answer | |
AnswerCumulative translation adjustmentEffect of exchange rate on cash | Answer | ||
Total liabilities and equity | $1,843,830 | $Answer | |
Statement of Cash Flows: | |||
Net income | $189,000 | Answer | $Answer |
Change in accounts receivable | (52,200) | Answer | Answer |
Change in inventories | (67,050) | Answer | Answer |
Change in current liabilities | 38,160 | Answer | Answer |
Net cash from operating activities | 107,910 | Answer | |
Change in PPE, net | (69,120) | Answer | Answer |
Net cash from investing activities | (69,120) | Answer | |
Change in long-term debt | 88,920 | Answer | Answer |
Dividends | (18,900) | Answer | Answer |
Net cash from financing activities | 70,020 | Answer | |
Net change in cash | 108,810 | Answer | |
AnswerCumulative translation adjustmentEffect of exchange rate on cash | Answer | ||
Beginning cash | 275,400 | Answer | Answer |
Ending cash | $384,210 | Answer | $Answer |
Income Statement: | In CADs | Translation | In |
Rate | US Dollars | ||
Sales | 1,350,000 | 0.73 | 985500 |
Cost of goods sold | -810,000 | 0.73 | -591300 |
Gross profit | 540,000 | 394200 | |
Operating expenses | -351,000 | 0.73 | -256230 |
Net income | 189,000 | 137970 | |
Statement of Retained Earnings: | |||
BOY ret. earnings | 708,750 | 553612 | |
Net income | 189,000 | 137970 | |
Dividends | -18,900 | 0.75 | -14175 |
EOY ret. earnings | 878,850 | 677407 | |
Balance Sheet: | |||
Assets | |||
Cash | $384,210 | 0.76 | $291,999.60 |
Accounts receivable | 313,200 | 0.76 | $238,032.00 |
Inventory | 402,300 | 0.76 | $305,748.00 |
Property, plant, and equipment (PPE), net | 744,120 | 0.74 | $550,648.80 |
Total assets | $1,843,830 | $1,386,428.40 | |
Liabilities and stockholders' equity | |||
Current liabilities | $228,960 | 0.76 | $174,009.60 |
L-T liabilities | 533,520 | 0.74 | $394,804.80 |
Common stock | 90,000 | 0.6 | $54,000.00 |
APIC | 112,500 | 0.6 | $67,500.00 |
Ret. earnings | 878,850 | 677407 | |
AnswerCumulative translation adjustmentEffect of exchange rate on cash | 18707 | ||
Total liabilities and equity | $1,843,830 | $1,386,428.40 | |
Statement of Cash Flows: | |||
Net income | $189,000 | 0.73 | $137,970 |
Change in accounts receivable | -52,200 | 0.73 | ($38,106) |
Change in inventories | -67,050 | 0.73 | ($48,947) |
Change in current liabilities | 38,160 | 0.73 | $27,857 |
Net cash from operating activities | 107,910 | $78,774 | |
Change in PPE, net | -69,120 | 0.74 | ($51,149) |
Net cash from investing activities | -69,120 | ($51,149) | |
Change in long-term debt | 88,920 | 0.74 | $65,801 |
Dividends | -18,900 | 0.75 | ($14,175) |
Net cash from financing activities | 70,020 | $51,626 | |
Net change in cash | 108,810 | $79,251 | |
AnswerCumulative translation adjustmentEffect of exchange rate on cash | 18707 | ||
Beginning cash | 275,400 | 0.7 | 192780 |
Ending cash | $384,210 | 0.76 | 291999.6 |