Question

Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000's) Cash Inventory Land Building Accumulated depreciation NGN 20,200 21,200 10,600 Notes payable NGN 16,400 11,000 4,100 41,000 Common stock Retained earnings (20,500) NGN 52,000 NGN 52,000 The subsidiary acquired the inventory on August 1, 2016, and the land and building in 2010. It issued the common stock in 2008. During 2017, the following transactions took place: 2017 Paid 8,100,000 NGN on the note payable Sold entire inventory for 17,000,000 NGN on account Sold land for 6,100,000 NGN cash Collected all accounts receivable Signed long-term note to receive 8,100,000 NGn cash Bought inventory for 20 ,100,000 NGN cash. Bought land for 3,100,000 NGN on account Declared and paid 3,100,000 NGN cash dividend to parent. Recorded depreciation for the entire year of 2,050,000 NGN. Feb. 1 May 1 June 1 Aug. 1 Sept.1 Oct. 1 Nov. 1 Dec. 1 Dec. 31

Answer 1

Above Question based on Exchange rate adjustment - in the Question it self exchange rate mentioned as per  

	Rolfe Company ( a US based ) - Subsidiary in Nigeria
	Balance as on 31st Dec , 2016
		Currency ( NGN)'000	Exchange Rate( As per Q)	Revised Amount - $)- after consider Exchange rate adjustment
	Cash	16,400
	Inventory	11,000
	Land	4,100
	Building	41,000
	Total Asset	72,500
	Accumulated Depreciation	20,500
	Note Payable	20,200
	Net Asset Value	31,800	0.0074	235
	Add :
	Sold Inventory @ 17000 NGN'000
.1st May	Gain on Sale (17000-11000)	6,000	0.0078	47
.1st June	Sold Land @ 6100 NGN'000
	Gain on Sale (6100-4100)	2,000	0.0080	16
	Net Impact on Asset Increase	39,800		298
.1st Dec	Declared Dividend Paid@ 3100 ( ngn 000)	3,100	0.0092	29
31st Dec	Accumulated Depreciation@ 2050 ( ngn 000)	2,050	0.0092	19
	( Depreciation use Avg Exchange rate)
	Net Asset Balance	34,650		251
	Use closing rate of Dec - 31st Dec 2017	34,650	0.0104	360
	Translation adjustment			(110)

	Cash Basis Translation Adjustment	Currency ( NGN)'000	Exchange Rate( As per Q)	Revised Amount - $)- after consider Exchange rate adjustment
	Net Cash basis
	Cash	16,400
	Note Payable	20,200
31st Dec'16	Net Cash basis	(3,800)	0.0074	(28)
	Movement
	Inventory Sold
.1st May	Sold Inventory @ 17000 NGN'000	17,000	0.0078	133
.1st June	Sold Land @ 6100 NGN'000	6,100	0.0080	49
	Increase in Cash Balance]	19,300		153
.1st Oct	Purchase Inventory @ 20100 NGN'000	(20,100)	0.0088	(177)
.1st Nov	Purchase Land @ 3100 NGN'000	(3,100)	0.0090	(28)
.1st Dec	Declared Dividend Paid@ 3100 ( ngn 000)	(3,100)	0.0092	(29)
	Net Monetary Movement Dec - 31st Dec 2017	(7,000)		(80)
	Net Monetary Movement Dec - 31st Dec 2017	(7,000)	0.0104	(73)
	Net Gain after translation adjustement			7