Norman Managements Consultants Foreign Currency Translations
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Current rate method:
See attached file.
On Jan 1, 2008, Alpha Systems, a US based company, purchased a controlling interest in Norman Management Consultants located in Zurich Switzerland. The acquisition was treated as a purchse transaction. The 2008 financial statements stated in Swiss francs are in the attachment.
Objective:
a: translate the year end balance sheet and income statement of the foreign subsidiary using the current rate method of translation.
b: using the same information, assume that the Brazilian real is identified as the functional currency of the subsidiary. Remeasure the account balances that are expressed in swiss francs into Brazilian reals.
Direct exchange rates for the real are:
Real per franc:
beginning of the current year 1.3940
end of current year 1.2899
average for current year 1.3445
dividend payment date 1.2438
THEN, translate the remeasured amounts that are now stated in Reals into dollars using the current rate method.
Direct exchange rates for the real are:
Dollars per Real:
beginning of the current year $.4891
end of current year .4630
average for current year .4751
dividend payment date .4740
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