A Gruber PLC Operates in England and Is a Subsidiary

question 20

Essay

a. Gruber PLC operates in England and is a subsidiary of Szudy International. The functional currency of Gruber is the British pound. Gruber reported net income in 2006 of £350M and paid a £75M dividend on July 1, 2006 when the exchange rate was $1.55 per pound. The current rate is $1.65 per pound and the average rate for 2006 was 1.60. Compute the change in retained earnings for the period in US dollars.
b. Windsor PLC operates in England and is a subsidiary of Buckingham International. The U.S. dollar is the reporting currency for Buckingham international. The functional currency of Windsor is the British pound, and it prepares financial information in British pounds for internal use.
Windsor's 2005 and 2006 net assets were 10,000 and 11,500, respectively. The 12/31/06 exchange rate was 1.56, the 12/31/05 exchange rate was 1.50 and the average rate for the year was 1.53.
What was the translation gain or loss for the year for Buckingham when it converted Windsor's financial statements into the reporting currency?

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Definitions:

Consciousness

The state of being aware of and able to think about one's surroundings, actions, and thoughts.

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Individuals who achieve an optimal level of psychological health, epitomized by self-acceptance and the realization of their potential.

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