Boerkian Co Assume That Boerkian Was a Foreign Subsidiary of a U

question 8

Essay

Boerkian Co. started 2013 with two assets: Cash of §26,000 (Stickles) and Land that originally cost §72,000 when acquired on April 4, 2010. On May 1, 2013, the company rendered services to a customer for §36,000, an amount immediately paid in cash. On October 1, 2013, the company incurred an operating expense of §22,000 that was immediately paid. No other transactions occurred during the year so an average exchange rate is not necessary. Currency exchange rates were as follows: $\begin{array}{ll}\text { April } 4,2010 & \S 1=\$ .28 \\\text { January } 1,2013 & \S 1=\$ .29 \\\text { May } 1,2013 & \S 1=\$ .30 \\\text { October } 1,2013 & \S 1=\$ .31 \\\text { December } 31,2013 & \S 1=\$ .35\end{array}$ Assume that Boerkian was a foreign subsidiary of a U.S. multinational company and the stickle (§) was the functional currency of the subsidiary. Calculate the translation adjustment for this subsidiary for 2013 and state whether this is a positive or a negative adjustment.

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Definitions:

Carbonate

A salt of carbonic acid, characterized by the presence of the carbonate ion, CO3^2-, or a compound containing this ion.

Covalent

A type of chemical bond where atoms share pairs of electrons.

Ionic

Relating to ions or the formation of ions by the gaining or losing of electrons, often discussed in the context of chemical bonds.

Metallic

Pertaining to, composed of, or resembling metal; having the characteristics or qualities of metals.