A U.S parent owns all of the stock of an Italian subsidiary. The subsidiary?s January 1 and December 31, 2017 trial balances are as follows, in euros:

Sales, purchases, and recurring out of pocket expenses occurred evenly throughout the year. Exchange rates ($/?) are:

Assume the subsidiary?s functional currency is the U.S. dollar. What is the remeasurement gain or loss for 2017?

a) $164,500 loss

b) $ 112,000 loss

c) $164,500 gain

d) $ 112,000 gain

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Cash, receivables Inventories, at FIFO cost Plant & equipment, net Liabilities Capital stock Retained earnings, beginning Dividends Sales Revenue Cost of goods sold Depreciation expense Out of pocket expenses January 1, 2017 Dr (Cr) €350,000 600,000 1,700,000 (1,500,000) (450,000) (700,000) €0 December 31, 2017 Dr (Cr) €325,000 750,000 1,550,000 (1,375,000) (450,000) 700,000 100,000 (1,950,000) (1,100,000) 150,000 500,000 €0 January 1, 2017 Average for 2017 Rate when dividends declared December 31, 2017 $1.45 1.35 1.32 1.30 Cash, receivables Inventories, at FIFO cost Plant & equipment, net Liabilities Capital stock Retained earnings, beginning Dividends Sales Revenue Cost of goods sold Depreciation expense Out of pocket expenses January 1, 2017 Dr (Cr) €350,000 600,000 1,700,000 (1,500,000) (450,000) (700,000) €0 December 31, 2017 Dr (Cr) €325,000 750,000 1,550,000 (1,375,000) (450,000) 700,000 100,000 (1,950,000) (1,100,000) 150,000 500,000 €0 January 1, 2017 Average for 2017 Rate when dividends declared December 31, 2017 $1.45 1.35 1.32 1.30

Answer rating: 100% (QA)

c 164500 gain Rate USS Beginning net monetary as... View the full answer