Question

Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 22,000 dinars, accounts receivable of 80,800 dinars, and land that cost 208,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 158,000 dinar notes payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for 128,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a 108,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow:

April 1, 2016	$0.41 =	1 dinar
January 1, 2017	0.44 =	1
May 1, 2017	0.45 =	1
June 1, 2017	0.47 =	1
December 31, 2017	0.49 =	1

1. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is the subsidiary’s functional currency. What is the translation adjustment for the subsidiary of the year 2017?
2. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the U.S. dollar is the subsidiary’s functional currency. What is the remeasurement gain or loss for 2017?
3. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2017 balance sheet, what is the translated value of the Land account? On the December 31, 2017 balance sheet, what is the remeasured value of the land

(Input all amounts as positive).

a.		Translation adjustment
b.		remeasurement
c.	Translated value of land
Remeasured value of land

Answer 1

a	What is the translation adjustment for the subsidiary of the year 2017?
		Dinar	Exchange Rate	US dollars
	Net Assets Jan 1	152800	0.44	67232
	Increase in net assets
	Service Revenue May 1	128000	0.45	57600
	Decrease in net assets
	Operating Expenses Jun 1	-108000	0.47	-50760
	Net Assets Dec 31	172800
	Net Assets Dec 31	172800	0.49	84672
	at current exchange rate
	Translation adjustment -(credit -positive)
b	What is the re measurement gain or loss for 2017?
		Dinar	Exchange Rate	US dollars
	Net Monetary assets (Liabilities)Jan 1	-55200	0.44	-24288
	Changes in net monetary assets
	Service Revenue May 1	128000	0.45	57600
	Operating Expenses Jun 1	-108000	0.47	-50760
	Net Monetary assets (Liabilities) Dec 31	-35200
	Net Monetary assets (Liabilities) Dec 31 at Curr	-35200	0.49	-17248
	Re measurement gain (credit)			-34696
c	The value of land can be calculated as below
		Translated	Remeasured
	Value in Dollars	208000	208000
	Exchange Rate	0.49	0.47
	Net Value	101920	97760