Watson Company has a subsidiary in the country of Alonza where the local currency unit is the kamel (KM). On December 31, 2010, the subsidiary has the following balance sheet:

The subsidiary acquired the inventory on August 1, 2010, and the land and buildings in 2000. It issued the common stock in 1998. During 2011, the following transactions took place:

a. If this is a translation, what is the translation adjustment determined solely for 2011?

b. If this is a remeasurement, what is the remeasurement gain or loss determined solely for 2011?

Transcribed Image Text:

Cash Inventory. Land Building Accumulated depreciation KM 16,000 10,000 Notes payable (due 2012). KM 19,000 Common stock. 20,000 4,000 Retained earnings 10,000 40,000 (21,000) KM 49,000 KM 49,000