Part A

Using the information below, translate the December 31, 2015 pro forma foreign

currency financial statements of a subsidiary that follow into the parent's reporting

currency, the U.S. dollar, using the current rate method.

The common stock was issued in 2005 when the exchange rate was $2.08 per LCU.Fixed assets were acquired in 2006 when the rate was $2.00 per LCU.

As of January 1, 2015, the Retained Earnings balance will be translated as $395,000.

The U.S. $ per LCU exchange rates for $1 expected for the current year follow:

January 1, 2015

$1.67

April 1, 2015

$1.61

September 1, 2015

$1.72

December 31, 2015

$1.54

Weighted Average Rate for 2015

$1.59

Inventory will be acquired evenly throughout the year

Dividends will be declared on April 1, 2015, and a piece of equipment is expected to be sold on September 1, 2015.

Part B

After preparing the budget for 2015 (Part A above), management was informed that political unrest was growing in the country where the subsidiary is located.If the situation is not quickly resolved at the beginning of 2016, the economy of the foreign nation will be impacted negatively and several of the exchange rates used when preparing the original budget (A above) will change by 40%.

Assuming the situation was not resolved quickly, translate the December 31, 2015 proforma financial statements using this new information.

Part C

Prepare the adjusting journal entry that would be made on the books of the Parent if the receivables on the subsidiary's balance sheet are all due from the parent and the situation described in Part B is not quickly resolved.The pro forma Accounts Receivable balance is $174,000.