Question

for the year ending December 31, 2017, are stated in kanquo (KQ). the local currency 180,080 Div 1, 2817 0.19 0.21 0.22 8.20 cial statements? statements? dollar consolidated financial statements? a. Salary payable

Answer 1

	Account	Exchange rate
a.	Sales	$0.20	Average rate
	Inventory	$0.22	Current rate
	Equipment	$0.22	Current rate
	Rent expense	$0.20	Average rate
	Dividends	$0.21	Historical
	Notes receivable	$0.22	Current rate
	Accumulated depreciation - equipment	$0.22	Current rate
	Salary payable	$0.22	Current rate
	Depreciation expense	$0.20	Average rate
b.	Sales	$0.20	Average rate
	Inventory	$0.19	Historical
	Equipment	$0.13	Historical
	Rent expense	$0.20	Average rate
	Dividends	$0.21	Historical
	Notes receivable	$0.22	Current rate
	Accumulated depreciation - equipment	$0.13	Historical
	Salary payable	$0.22	Current rate
	Depreciation expense	$0.13	Historical
Explanation
In the first part the functional currency of the subsidiary is Kanquo in which case U.S. company will have to use the current rate method to translate the currencies.
In the current rate method, the assets and liabilities are reported based on the exchange rate at year end, each year on translation
The income and expense is reported using the average rate assuming they have been occuring throughout the year.
Dividend has occurred on specific date and so it would be reported on the date when dividend was declared
In the second part the functional currency of the subsidiary is U.S dollar and so the parent company will have to use the Temporal method remeasurement to translate the amounts.
In this method the fixed assets are reported at the date when they are purchased that is reported as historical costs. Since assets are reported at historical costs the accumulated depreciation and depreciation expense is also reported using historical rate.
Assuming the sales and expense has occurred throughout the year and so they are reported at average exchange rate.
The notes receivable and salary payable are reported at their current date that is year end date.