Lunes Company,a U

question 2

Essay

Lunes Company,a U.S.company,owns a 100% interest in its subsidiary,Placido,S.A. ,located in Italy.Placido,S.A. ,began operations on January 1,2014.The subsidiary's operations consist of leasing space in an office building.The building,which cost one million euros,was financed primarily by Italian banks.All revenues and expenses are received and paid in euros.The subsidiary also maintains its accounting records in euros.In light of these facts,management of the U.S.parent has determined that the euro is the functional currency of the subsidiary.
The subsidiary's balance sheet at December 31,2014,and income statement for the year then ended,are presented below,in euros:
The following are relevant exchange rates for the year 2014:
€1 = $1.50 at the beginning of 2014,at which time the common stock
was issued and the land and building were financed by the mortgage.
€1 = $1.55 weighted average for 2014.
€1 = $1.58 at the date the dividends were declared and paid and
the unearned rent was received.
€1 = $1.62 at the end of 2014.
Required:
Prepare in U.S.dollars a balance sheet at December 31,2014,and an income statement for the year then ended.

Calculate the impact of beginning and ending inventory adjustments on net income or loss.

Understand the basic structure and functions of the nervous system.

Identify the roles and functions of various brain regions.

Recognize the importance of the spinal cord and its pathways.

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Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase an asset at a specified price within a certain time frame.

Strike Price

The predetermined price at which an option's underlying asset can be bought or sold.

Convertible Bond

A type of bond that can be converted into a predetermined number of the issuer's equity shares at certain times during its life, usually at the discretion of the bondholder.

Coupon Rate

The annual coupon divided by the face value of a bond.