Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash Inventory Land Building Accumulated depreciation 2011 2013 2020 Feb. 1 Paid 8,050,000 NGN on the note payable. May 1 Sold entire inventory for 16,500,000 NGN on account. June 1 Sold land for 6,050,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,050,000 NGN cash. Oct. 1 Bought inventory for 20,050,000 NGN cash. Nov. 1 Bought land for 3,050,000 NGN on account. Dec. 1 Declared and paid 3,050,000 NGN cash dividend to parent. Dec.31 Recorded depreciation for the entire year of 2,025,000 NGN. The U.S dollar ($) exchange rates for 1 NGN are as follows: August 1, 2019 December 31, 2019 February 1, 2020 May 1, 2020 June 1, 2020 August 1, 2020 September 1, 2020 October 1, 2020 November 1, 2020 December 1, 2020 December 31, 2020 Average for 2020 NGN 15,450 10,500 4,050 40,500 (20,250) NGN 50,250 The subsidiary acquired the Inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: NGN 1 1 1 1 1 1 1 1 1 1 1 1 1 1 "1 ||| "1 ⠀⠀⠀⠀⠀⠀ Notes payable Common stock Retained earnings $ 0.0053 0.0047 0.0067 0.0069 0.0071 0.0073 0.0075 0.0079 0.0081 0.0083 0.0085 0.0087 0.0094 0.0084 NGN 20,100 20,100 10,050 NGN 50,250
Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash Inventory Land Building Accumulated depreciation 2011 2013 2020 Feb. 1 Paid 8,050,000 NGN on the note payable. May 1 Sold entire inventory for 16,500,000 NGN on account. June 1 Sold land for 6,050,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,050,000 NGN cash. Oct. 1 Bought inventory for 20,050,000 NGN cash. Nov. 1 Bought land for 3,050,000 NGN on account. Dec. 1 Declared and paid 3,050,000 NGN cash dividend to parent. Dec.31 Recorded depreciation for the entire year of 2,025,000 NGN. The U.S dollar ($) exchange rates for 1 NGN are as follows: August 1, 2019 December 31, 2019 February 1, 2020 May 1, 2020 June 1, 2020 August 1, 2020 September 1, 2020 October 1, 2020 November 1, 2020 December 1, 2020 December 31, 2020 Average for 2020 NGN 15,450 10,500 4,050 40,500 (20,250) NGN 50,250 The subsidiary acquired the Inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: NGN 1 1 1 1 1 1 1 1 1 1 1 1 1 1 "1 ||| "1 ⠀⠀⠀⠀⠀⠀ Notes payable Common stock Retained earnings $ 0.0053 0.0047 0.0067 0.0069 0.0071 0.0073 0.0075 0.0079 0.0081 0.0083 0.0085 0.0087 0.0094 0.0084 NGN 20,100 20,100 10,050 NGN 50,250
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hh2.
![Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31,
2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]):
Cash
Inventory
Land
Building
Accumulated depreciation
2020
Feb. 1 Paid 8,050,000 NGN on the note payable.
May 1 Sold entire inventory for 16,500,000 NGN on account.
June 1 Sold land for 6,050,000 NGN cash.
Aug. 1 Collected all accounts receivable.
NGN 15,450
10,500
4,050
40,500
(20,250)
NGN 50, 250
The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During
2020, the following transactions took place:
Sept. 1 Signed long-term note to receive 8,050,000 NGN cash.
Oct. 1 Bought inventory for 20,050,000 NGN cash.
2011
2013
Nov. 1 Bought land for 3,050,000 NGN on account.
Dec. 1 Declared and paid 3,050,000 NGN cash dividend to parent.
Dec.31 Recorded depreciation for the entire year of 2,025,000 NGN.
The US dollar ($) exchange rates for 1 NGN are as follows:
August 1, 2019
December 31, 2019
February 1, 2020
May 1, 2020
June 1, 2020
August 1, 2020
September 1, 2020
October 1, 2020
November 1, 2020
December 1, 2020
December 31, 2020
Average for 2020
NGN 1 =
1
=
1
1
1
ddd
1
1
1
1
1 =
1
=
=
Notes payable
Common stock
Retained earnings
=
1 =
1 =
1
=
$ 0.0053
0.0047
0.0067
0.0069
0.0071
0.0073
0.0075
0.0079
0.0081
0.0083
0.0085
0.0087
0.0094
0.0084
NGN 20,100
20,100
10,050
NGN 50,250](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2f57c3f1-297c-4d4f-b25b-85b70449f161%2F587155ed-b339-46b3-a368-751f569951a4%2Ftx8bwqa_processed.png&w=3840&q=75)
Transcribed Image Text:Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31,
2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]):
Cash
Inventory
Land
Building
Accumulated depreciation
2020
Feb. 1 Paid 8,050,000 NGN on the note payable.
May 1 Sold entire inventory for 16,500,000 NGN on account.
June 1 Sold land for 6,050,000 NGN cash.
Aug. 1 Collected all accounts receivable.
NGN 15,450
10,500
4,050
40,500
(20,250)
NGN 50, 250
The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During
2020, the following transactions took place:
Sept. 1 Signed long-term note to receive 8,050,000 NGN cash.
Oct. 1 Bought inventory for 20,050,000 NGN cash.
2011
2013
Nov. 1 Bought land for 3,050,000 NGN on account.
Dec. 1 Declared and paid 3,050,000 NGN cash dividend to parent.
Dec.31 Recorded depreciation for the entire year of 2,025,000 NGN.
The US dollar ($) exchange rates for 1 NGN are as follows:
August 1, 2019
December 31, 2019
February 1, 2020
May 1, 2020
June 1, 2020
August 1, 2020
September 1, 2020
October 1, 2020
November 1, 2020
December 1, 2020
December 31, 2020
Average for 2020
NGN 1 =
1
=
1
1
1
ddd
1
1
1
1
1 =
1
=
=
Notes payable
Common stock
Retained earnings
=
1 =
1 =
1
=
$ 0.0053
0.0047
0.0067
0.0069
0.0071
0.0073
0.0075
0.0079
0.0081
0.0083
0.0085
0.0087
0.0094
0.0084
NGN 20,100
20,100
10,050
NGN 50,250
Transcribed Image Text:a. Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2020?
b. Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2020?
(Input all amounts as positive. Enter amounts in whole dollars.)
a. Positive
b. Remeasurement gain
translation adjustment $ 87,615
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