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Solved: Zugar Company is domiciled in a country whose

currency is

Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with
three assets: cash of 20,000 dinars, accounts receivable of 80,000 dinars, and land that cost
200,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 150,000 dinar
note payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for
120,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a
100,000 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 . . . . . . . . . . . . . . . . . . . . . $0.33 = 1 dinar

January 1, 2017 . . . . . . . . . . . . . . . . . . 0.36 = 1

May 1, 2017 . . . . . . . . . . . . . . . . . . . . . 0.37 = 1

June 1, 2017 . . . . . . . . . . . . . . . . . . . . 0.39 = 1

December 31, 2017 . . . . . . . . . . . . . . 0.41 = 1

a. 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 this subsidiary for the year 2017?

b. 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?

c. 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 account?

Zugar Company is domiciled in a country whose currency is

ANSWER
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