Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local

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)):

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:

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

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

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

Cash NGN 16,740 Notes payable NGN 20,280 Inventory 11,400 Common stock 21,800 Land 4,140 Retained earnings 10,900 Building 41,400 Accumulated depreciation (20,700 ) NGN 52,980 NGN 52,980

Explanation / Answer

a)

b)

Particulars Amount (NGN) Rate per NGN Amount ($) Net asset Balance, 1/1 32700000 $0.0078 255060 Increases in net assets :- Sold inventory at a Profit, 1/5 6000000 $0.0082 49200 Sold land at a gain, 1/6 2000000 $0.0084 16800 Decreases in net assets :- Paid a dividend, 1/12 (3140000) $0.0096 (30144) Depreciation Recorded (2070000) $0.0102 (21114) Net Assets Balance, 31/12 35490000 269802 Net Assets Balance, 31/12 at current exchange rate 35490000 $0.0112 397488 Translation adjustment - Positive (127686)

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.