A French Subsidiary of a U Required:
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Re-Measure the Following Items from the December 31

question 64

Essay

A French subsidiary of a U.S.firm keeps accounting records in euros.The U.S.dollar is considered the subsidiary's functional currency.Assume the following exchange rates:
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$$\begin{array} { l r } \text { Date } & \text { 1 euro equal to } \\\text { January } 1,2018 & \$ 1.05 \\\text { July } 1,2018 & \$ 1.07 \\\text { Dec. } 31,2018 & \$ 1.09 \\\text { Average } 2018 & \$ 1.08 \\\text { January } 1,2019 & \$ 1.09 \\\text { July } 1,2019 & \$ 1.07 \\\text { Dec. } 31,2019 & \$ 1.06 \\\text { Average } 2019 & \$ 1.08\end{array}$$ Required:
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Re-measure the following items from the December 31, 2019 trial balance of the subsidiary:
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a.Sales made evenly throughout 2019 = 100,000 euros
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b.Cost of goods sold = 30,000 euros
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5,000 euros purchased July 1, 2018
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25,000 euros purchased July 1, 2019
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c.Salary expense for 2019 = 40,000 euros
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d.Land = 1,000,000 euros
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200,000 euros purchased January 1, 2018
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800,000 euros purchased July 1, 2019

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Definitions:

Book Value

Book value is the value of an asset as it appears on the balance sheet, calculated by subtracting any accumulated depreciation from its purchase price.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.