Adjusted Remeasurement

Trial Exchange
Balance ($) Rate
Balance Sheet
Cash 930,000.00 40.25
Accounts receivable (net) 608,000.00 40.25
Inventory (FIFO) 830,000.00 Schedule
Land 500,000.00 40.00
Buildings (net) 650,000.00 40.00
Equipment (net) 430,000.00 40.00
Total 3,948,000.00
Accounts payable 640,000.00 40.25
Short-term notes payable 635,000.00 40.25
Bonds payable 900,000.00 40.25
Common stock,P10 par 960,000.00 40.00
Paid-in capital in excess of par 300,000.00 40.00
Retained earnings 513,000.00 (B/A)
Total 3,948,000.00
Combined Statement of Income and
Retained Earnings
Sales 3,020,000.00 40.20
Cost of goods sold 1,850,000.00 Schedule
Depreciation expense 100,000.00 40.00
Other expenses 655,000.00 40.20
Income tax expense 82,000.00 40.20
Net income before remeasurement loss
Remeasurement loss-debit -
Net income to Retained Earnings 333,000.00
Retained earnings 1/1 480,000.00
Total 813,000.00
Less: Dividends declared, 9/1/2014 300,000.00 40.10
Retained Earnings, 12/31 from balance sheet 513,000.00

*Include as a component of other comprehensive income

(1) Retained earnings in pesos on January 2 (date of acquisition)
(A) Average exchange rate used to approximate the rate on the date these elements were recog
(H) Historical exchange rate
Current exchange rate
B/A- balancing amount

Schedule
Translation of Cost of Goods Sold
Remeasurement
Exchange
Accounts ($) Rate
Beginning inventory (assumed) 760,000.00 40.00
Purchases (assumed) 1,920,000.00 40.20
Total 2,680,000.00
Less: Ending Inventory 830,000.00 40.22
Cost of Goods Sold 1,850,000.00
 Adjusted
Trial Balance
(Pesos)

37,432,500.00 Monetary assets 1,538,000.00

24,472,000.00 Monetary liabilities 2,175,000.00
33,382,600.00 637,000.00
20,000,000.00
26,000,000.00
17,200,000.00
158,487,100.00
25,760,000.00
25,558,750.00
36,225,000.00
38,400,000.00
12,000,000.00
20,543,350.00 20,543,350.00
158,487,100.00

121,404,000.00
74,201,400.00
4,000,000.00
26,331,000.00
3,296,400.00
13,575,200.00
201,850.00
13,373,350.00 RE Beg 19,200,000.00
19,200,000.00 Net Income 13,373,350.00
32,573,350.00 Dividends - 12,030,000.00
12,030,000.00 RE end 20,543,350.00
20,543,350.00

e elements were recognized.

 Pesos
30,400,000.00
77,184,000.00
107,584,000.00
33,382,600.00
74,201,400.00
 US $ Translation
Exchange
Rate
1/2 Exposed net monetary liability position 700,000 40
Adjustment for change in net monetary position
during year:
Less:Increase in cash and receivables during the year - 3,020,000 40.20
Add:decrease in monetary assets or decrease
in monetary liabilities
Purchases 1,920,000 40.20
Other expenses 655,000 40.20
Income taxes 82,000 40.20
Dividends declared 300,000 40.10
Net monetary liability position translated using rate in
effect at date of each transaction
12/31 Exposed net monetary liability position 637,000 40.25
Remeasurement gain or (loss)

*A condensed balance sheet for S Company on January 2,2014 was as follows:

US $
Monetary assets 1,100,000 Monetary Liabilities
Nonmonetary assets Common stock
Inventory 760,000 Paid-in capital in excess of par
Fixed assets 1,680,000 Retained earnings
Total 3,540,000 Total

1/1 Net assets = $3,540,000 -1,800,000=1,740,000

**The beginning balance is zero since this was the first year the investment was held.
 Reporting
Currency
(Pesos)
28,000,000

- 121,404,000 Sales

77,184,000
26,331,000
3,296,400
12,030,000

25,437,400
25,639,250
- 201,850

US $
1,800,000 700,000 Net Monetary
960,000 Liability
cess of par 300,000
480,000
3,540,000