Problem

Translation ChoicesThe U.S. parent company is preparing its consolidated financial stateme...

Translation Choices

The U.S. parent company is preparing its consolidated financial statements for December 31, 20X4. The foreign company’s local currency (LCU) is the functional currency. Information is presented in Data Set A and Data Set B.

Data Set A:

	Exchange Rate	Date
1.	LCU 0.74	June 16, 20×1: date foreign company purchased
2.	LCU 0.80	January 1, 20×4: beginning of current year
3.	LCU 0.87	March 31, 20×4
4.	LCU 0.86	June 12, 20×4
5.	LCU 0.85	Average for year 20×4
6.	LCU 0.84	November 1, 20×4
7.	LCU 0.83	December 31, 20×4: end of current year
8.	No translation rate is applied

Data Set B:

a.	Accounts receivable outstanding from sales on March 31, 20×4.
b.	Sales revenue earned during year.
c.	Dividends declared on November 1, 20×4.
d.	Ending inventory balance from acquisitions through the year.
e.	Equipment purchased on March 31, 20×4.
f.	Depreciation expense on equipment.
g.	Common stock outstanding.
h.	Dividends payable from dividends declared on June 12, 20×4.
i.	Accumulated Other Comprehensive Income balance from prior fiscal year.
j.	Bond payable issued January 1, 20×4.
k.	Interest expense on the bond payable.

Required

a.Select the appropriate exchange rate from the amounts presented in Data Set A to prepare the translation worksheet for each of the accounts presented in Data Set B.

b.Determine the direct exchange rate for January 1, 20X4.

c.Determine whether the U.S. dollar strengthened or weakened during 20X4.