Question - Braco Corporation is a subsidiary of Telco Inc. in Mexico. It was established before 1 January 2010.
Braco's balance sheet items as of 31 December 2010, in pesos:
Cash 1,500 Accounts payable 3,000
Accounts rec. 1,500 Long-term debt 5,000
Inventory 2,500 Share Capital 3,000
Fixed assets 8,000 Retained earnings 1,500
Accum. depr. 1,000
Braco's income statement items for 2010, in pesos:
Sales 21,000 Depr. exp 1,000
COGS 15,000 Interest exp. 500
S, G, &A exp. 2,500 Income tax exp. 500
Additional Information:
(i) There was no beginning inventory.
(ii) Inventory that is carried at cost was acquired evenly during the last quarter of 2010.
(iii) Fixed assets were acquired on 1 January 2010.ACC303 Copyright © 2014 SIM University Page 4 of 5 Examination - January Semester 2014
(iv) Purchases were made consistently throughout year.
(v) Share Capital was issued and paid on 1 January 2010.
(vi) Retained Earnings opening balance is 0.
(vii) Dividend paid of 500 pesos at Dec 21, 2010 with exchange of $0.084
(viii) Relevant exchange rates (U.S. dollar per Mexican peso):
January 1, 2010 $0.110
Average rate for 2010 $0.096
Average rate for 4th quarter 2010 $0.091
December 31, 2010 $0.081
Required: Demonstrate the translation of Braco's financial statements into USD in accordance with U.S. GAAP at Dec 31, 2010 using current rate method.