A U.S. company acquired a Turkish subsidiary at the beginning of the current year. The subsidiary's...
A U.S. company acquired a Turkish subsidiary at the beginning of the current year. The subsidiary's trial balances for January 1 and December 31 are presented below, in Turkish lira.
|
January 1 Dr (Cr) |
December 31 Dr (Cr) |
|
|
Cash, receivables |
₺ 40,000 |
₺ 20,000 |
|
Plant & equipment, net |
400,000 |
435,000 |
|
Liabilities |
(175,000) |
(170,000) |
|
Capital stock |
(115,000) |
(115,000) |
|
Retained earnings, January 1 |
(150,000) |
(150,000) |
|
Dividends |
15,000 |
|
|
Sales revenue |
(800,000) |
|
|
Operating expenses |
________ |
765,000 |
|
Total |
₺ 0 |
₺ 0 |
New plant & equipment of ₺100,000 was acquired during the year.
Operating expenses include ₺65,000 of depreciation on plant &
equipment, of which ₺10,000 is related to plant & equipment
purchased during the year. Exchange rates (U.S.$/₺) are as
follows:
|
January 1 |
$0.24 |
|
Average for year |
0.25 |
|
Plant & equipment acquired |
0.26 |
|
Dividends declared |
0.27 |
|
December 31 |
0.30 |
Assume that the subsidiary's functional currency is the Turkish
lira. What is the subsidiary's translated retained earnings balance
at year-end?
| A. |
$49,700 |
|
| B. |
$42,200 |
|
| C. |
$40,700 |
|
| D. |
$44,750 |
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