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Express Travel Foreign currency conversions

See attached file.

Express Travel owns a travel agency that operates in London. The account balances in pounds for the subsidiary are in the attachment.

The subsidiary did not make any purchases of office supplies or plant assets during the year. Revenues were earned and operating expenses, other than depreciation and supplies used, were incurred evenly throughout the year.

a. prepare a schedule to compute the translations adjustment for the year, assuming foreign entity's functional currency is the pound.
b. prepare a schedule compute the translation gain or loss, assuming the foreign entity's functional currency is the US dollar.
c. explain why the results differ under the two methods.

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Solution Summary

This solution provides a detailed step by step explanation of the given finance problem, which is calculated in Excel.