Assignment
Dakota, Inc., a U.S. based company, owns a company that operates in France. Account balances in francs for the subsidiary are shown below:
2017
January 1 December 31
Cash and Receivables 24,000 26,000
Supplies 1,000 500
Property, Plant, and Equipment 52,500 49,000
Accounts Payable (11,500) (5,500)
Long-term Notes Payable (19,000) (11,000)
Common Stock (30,000) (30,000)
Retained Earnings (17,000) (17,000)
Dividends-Declared & Paid on Dec 31 ---- 3,000
Revenues ---- (30,000)
Operating Expenses ---- 15,000
Totals -0- -0-
Exchange rates for 2017 were as follows:
January 1 $0.22
Average for the year 0.19
December 31 0.18
Revenues were earned and operating expenses, except for depreciation and supplies used, were incurred evenly throughout the year. No purchases of supplies or plant assets were made during the year. Note: supplies are a non-monetary asset and should be treated like PPE.
Required:
A. Prepare the financial statements for the year, assuming the subsidiary's functional currency is the franc.
B. Prepare the financial statements for the year, assuming the subsidiary's functional currency is the U.S. dollar.