Question

Darron Co. was formed on January 1, 2018 as a wholly owned foreign subsidiary of a...

Darron Co. was formed on January 1, 2018 as a wholly owned foreign subsidiary of a U.S. corporation.
- Darron's functional currency was the stickle (§).
- The following transactions and events occurred during 2018:

Jan. 1   Darron issued common stock for §1,000,000.
June 30 Darron paid dividends of §20,000.
Dec. 31   Darron reported net income of §80,000 for the year.

Exchange rates for 2018 were:
Jan. 1                                                   $1 = §.48
June 30                                                $1 = §.46
Dec. 31                                                 $1 = §.42
Weighted average rate for the year   $1 = §.44

What was the amount of the translation adjustment for 2018?

(You must show work to earn points. Write out and label each component.)

60,800 decrease in relative value of net assets.

466,400 increase in relative value of net assets.

26,000 increase in relative value of net assets.

61,200 decrease in relative value of net assets.

60,800 increase in relative value of net assets.

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Answer #1

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