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Translating the Financial Statements into U.S. Dollars

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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.

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The solution translates the financial statements into U.S. dollars assuming that foreign currency is the functional currency.

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Since the foreign currency is the functional currency, the current rate method should ...

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