Question

Translation and Remeasurement of Account Balances

U.S. Industries has a subsidiary in Switzerland. The subsidiary’s financial statements are maintained in Swiss francs (CHF). Exchange rates ($/CHF) for selected dates are as follows:

January 1, 2018	$1.02		November 30, 2020	$1.08
January 1, 2019	1.04		December 31, 2020	1.09
			Average for 2020	1.06

The following items appear in the subsidiary’s trial balance at December 31, 2020:

1. Cash in bank, CHF4,000,000.

2. Inventory, CHF3,000,000. The inventory was acquired on November 30, 2020.

3. Machinery and equipment, CHF11,000,000. A review of the records indicates that the company bought equipment costing CHF5,000,000 in January 2018 (20 percent of this was sold in January 2020) and additional equipment costing CHF7,000,000 in January 2019. Ignore accumulated depreciation.

4. Depreciation expense on machinery and equipment, CHF1,100,000 (depreciated over ten years, straight-line basis).

Required

Calculate the dollar amount for each of the above items, assuming the functional currency of the Swiss subsidiary is

(a) the U.S. dollar and

(b) the Swiss franc.

Enter answers using all zeros (do not abbreviate to millions or thousands).

		(a)	(b)
Cash		Answer	Answer
Inventory		Answer	Answer
Machinery and equipment		Answer	Answer
Depreciation expense		Answer	Answer

Answer 1

Tabod - Sol 0 cayh - 4.000.000 - 1,000,000 X 1.09 100 009' ES (2). Ynventory - 3 000 000 3.000 000 X 1.08 . . . . . 100 . : 32400 (3) machinery Ep equipment -- 4000000 x 1.02 100 (b) - 100 = 401800 ::.- 7000000 104 :79800 can adding two values know we = 40.800 +42800 = 113600

pagel-2 Depreciation Expense = 1100000 x 1.06 100 - 11660 Particluars UBDollar Swiss ranc cash (400.000 X!.09) 43600 4000000 100 3000000 Inven tõly (3000000X108) 32400 100 machinery & equipment 14000000 X 1,02+ 11000000 113600 100 7000000 x 1.04 11000000 depreciation Expense Notes Faleign currency monetary Jeems are Recognised at closing Rate – Föleign Currency Noni monetary Htemg valued At historical colt are recognised at the Rate on the date of transaction -

page : 3 - Foreign currency NON monetary yteme: valued at fair value are recognised at rate on the date when fair value is determined = monetary items are cath Accounts Recivable, Accounts payable etc. NON monetary Ptems are fixed affets, Inventary etc.