Question

Existing Subsidiary—Translation (see related P7.2) Refer to the information in P7.2 and assume SuperValu’s functional currency is the krona.

Dr (Cr) Account Balances December 31 January 1 Cash.................... Accounts receivable, net .. Plant and equipment, net .... Accounts payable......... Notes payable............ Capital stock........ Retained earnings, January Sales.... Depreciation expense... Other expenses .......... Totals ................... kr 240,000 360,000 2,000,000 (200,000) (600,000) (400,000) (1,160,000) (1,200,000) 320,000 640,000 kr 175,000 400,000 2,320,000 (535,000) (800,000) (400,000) (1,160,000)

Exchange rates in 2019 were:

Translate SuperValu’s 2019 ending trial balance into U.S. Dollars. Include a schedule calculating the 2019 translation gain or loss, appearing in other comprehensive income tax 2019.

Answer 1

Please find attached Trial Balance as of 31st December 2019 in US $ with translation adjustment to report under other comprehensive income statement. All assets and liabilities (Except capital stock and retained earnings) are to be converted using exchange rate on balance sheet date and income statement items are to be converted using average rate during the year. Capital and Retained Earnings are to be converted using historical rate only. Based on this, below trial balance has been presented.

January - 01 Average Rate December - 31 0.13 Historical Rate 0.14 Average Rate 0.16 Rate as on Balance Sheet Date Cash Accounts Receivable, Net Plant and Equipment, Net Depreciation Expenses Other Expenses Total Trial balance in US $ as on 31st December 2019 Dr. / (Cr.) (in kr) Exch Rate B 240,000 0.16 Rate as on Balance Sheet Date 360,000 0.16 Rate as on Balance Sheet Date 2,000,000 0.16 Rate as on Balance Sheet Date 320,000 0.14 Average Rate 640,000 0.14 Average Rate 3,560,000 Dr. / (Cr.) (In $) A*B 38,400 57,600 320,000 44,800 89,600 550,400 Accounts Payable Notes Payable Capital Stock Retained Earnings Sales Translation Adjustment Total -200,000 -600,000 -400,000 -1,160,000 -1,200,000 0.16 Rate as on Balance Sheet Date 0.16 Rate as on Balance Sheet Date 0.13 Historial Rate 0.13 Historial Rate 0.14 Average Rate Balancing Figure -32,000 -96,000 -52,000 - 150,800 -168,000 -51,600 -550,400 o -3,560,000 Sum of all assets Sum of all liabilities before translation adjustment Translation adjustment (balancing figure) 550,400 -498,800 51,600