Ambercrombie Co., a U.S. firm, formed a German company in 2014 by purchasing the

Question

Ambercrombie Co., a U.S. firm, formed a German company in 2014 by purchasing the common stock of the newly formed Dolce Inc. The functional currency of Dolce is the Euro. During their first three years , Dolce experienced the following activitiy in retained earnings.

2014 Net Loss 100,000 euros

2015 Net Income 200,000 euros

January 1st 2016 Dividend of 50,000 euros

2016 Net Income 75,000 euros

December 31, 2013 the euro rate is .20

December 31, 2014 the euro rate is .22

Average for 2014 the euro rate is .215

January 1 2016 the euro rate is .245

Average for 2015 the eurp rate is .24

December 31, 2016 the euro rate is .26

average 2016 is .25

What is the translated December 31, 2016 balance of the retained earnings for Dolce

Explanation / Answer

for 2014

100,000 *.215

for 2015

200,000*0.24

for 2016

75,000*0.25

=18750

plus

50,000*0.245=12250

total 31000

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