1. Below you will find the balance sheet and income statement of a U.S. Corp's foreign subsidiary at the end of its first year of operations (see attachment). The following exchange rates were in effect during the period.
Jan. 1, 2005 - $1 = 1FC
Dec. 31, 2005 - $1.70 = 1FC.
The average exchange rate during the period was $1.40 = 1FC. The common stock was issued on Jan. 1, 2005.
Assuming that foreign currency is the functional currency translate the financial statements into U.S. dollars.
See attached for calculations.© BrainMass Inc. brainmass.com March 4, 2021, 10:46 pm ad1c9bdddf
Since the foreign currency is the functional currency, the current rate method should ...
The solution translates the financial statements into U.S. dollars assuming that foreign currency is the functional currency.