Abercrombe Co., a U.S. firm, formed a German company in 20X4 by purchasing the common stock of the newly formed Dolce Inc. The functional currency of Dolce is the euro. During their first three years, Dolce experienced the following activity in retained earnings:
20X4 Net loss 100,000 euros
20X5 Net income 200,000 euros
January 1, 20X6 Dividend 50,000 euros
20X6 Net income 75,000 euros
The following exchange rates could be relevant:
Date 1 euro equal to
December 31, 20X3 $0.20
December 31, 20X4 $0.22
Average 20X4 $0.215
January 1, 20X6 $0.245
Average 20X5 $0.24
December 31, 20X6 $0.26
Average 20X6 $0.25
Required: What is the translated December 31, 20X6, balance of the retained earnings for Dolce?
Click here for the solution: Abercrombe Co., a U.S. firm, formed a German company in 20X4 by purchasing the common stock of the newly formed Dolce Inc
