A US-Owned Foreign Subsidiary Has the Following Beginning and Ending Stockholders

question 69

Essay

A U.S.-owned foreign subsidiary has the following beginning and ending stockholders' equity for 2016:
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$\begin{array}{lrlrl}&\text { January } 1 && \text { December } 31\\\text { Common stock } & 120,000 & \text { FC } & 140,000 & \text { FC } \\\text { Paid-in capital in excess of par } & 30,000 & & 40,000 & \\\text { Retained earnings } & 60,000 & & 100,000 & \\& \underline{210,000} & \text { FC } & \underline{280,000} & \text { FC }\end{array}$
The change in common stock resulted from a sale of stock to the parent firm on May 15.The change in retained earnings resulted from a July 1 dividend of 10,000 FC and net income for 2016.Various exchange rates were as follows:
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$$\begin{array} { l r } \text { Date } & \text { 1 FC equal to } \\\text { January } 1,2016 & \$ 1.10 \\\text { May } 15,2016 & \$ 1.12 \\\text { July } 1,2016 & \$ 1.13 \\\text { December } 31,2016 & \$ 1.15 \\\text { 2016 average } & \$ 1.125\end{array}$$ Required:
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Compute the 2016 translation adjustment for the foreign subsidiary.

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Definitions:

Interpretations

The process of assigning meaning to information that has been received, often influencing perception and decision-making.

Psychologist's Expectations

The preconceived notions or hypotheses that psychologists might have about the outcome of their studies or the behavior of their subjects.

Rorschach Inkblot Test

A psychological test in which subjects' perceptions of inkblots are recorded and then analyzed using psychological interpretation, complex algorithms, or both, often used to examine a person's personality characteristics and emotional functioning.

Hermann Rorschach

A Swiss psychiatrist and psychoanalyst known for developing the Rorschach inkblot test, a projective test of personality.