Perez Company, a Mexican subsidiary of a U.S. company, sold equipment costing 20

Question

Perez Company, a Mexican subsidiary of a U.S. company, sold equipment costing 200,000 pesos with accumulated depreciation of 75,000 pesos for 140,000 pesos on March 1, 2011. The equipment was purchased on January 1, 2010. Relevent exchange rates for the peso are as follows:

January 1, 2010 $.11

March 1, 2011 .106

December 31, 2011 .102

Average, 2011 .105

1. The financial statements for Perez are translated by its U.S. parent. What amount of gain or loss would be reported in its translated income statement?

2. The financial statements for Perez are remeasured by its U.S. parent. What amount of gain or loss would be reported in its income statement?

Explanation / Answer

1) $1590

2) $1090

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