Given below are comparative foreign currency balance sheets at December 31, 2015 and 2016, and a sta

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Given below are comparative foreign currency balance sheets at December 31, 2015 and 2016, and a statement of income for the year ended December 31, 2016, for BN Corporation, a wholly-owned foreign subsidiary of a U.S. company. The statements conform with U.S. generally accepted accounting principles before translation to U.S. dollars.

Capital stock was issued and fixed assets acquired when the exchange rate was FC1 = $.17. Inventories at January 1, 2016, were acquired during the fourth quarter of 2015. Purchases (FC 6,250), sales, other expenses, and dividends (FC 690) occurred evenly during 2016. Retained earnings in U.S. dollars at December 31, 2015, under the temporal method were $316.

Exchange rates were as follows: January 1, 2016 FC1 = $.23 December 31, 2016 FC1 = $.18 Average during 2016 FC1 = $.22 Average during fourth quarter, 2015 FC1 = $.23 Average during fourth quarter, 2016 FC1 = $.19

Financial Statements of BN Corporation

Balance Sheet 12/31/2015 12/31/2016 ——————————————————————————————————– Cash FC 300 FC 500 Accounts receivable (net) 1,300 1,000 Inventories (lower of FIFO cost or market) 1,200 1,500 Fixed assets (net) 9,000 8,000 Total assets FC 11,800 FC 11,000

Accounts payable FC 2,200 FC 2,400 Long-term debt 4,400 3,000 Capital stock 2,000 2,000 Retained earnings 3,200 3,600 Total liabilities and owners’ equity FC 11,800 FC 11,000

Income Statement Year ended 12/31/16 ——————————————————————————————————– Sales FC 10,000 Expenses Cost of sales 5,950 Depreciation (straight-line) 1,000 Other 1,493 8,443 Operating income FC 1,557 Income taxes 467 Net income FC 1,090

Required: Prepare the 2016 translated income statement and balance sheet for BN Corporation using (a) the current rate method and (b) the temporal method.

I need explain for the remeasurments gain and it should equal to the different between the monetary asset and monetary liability. also, GIVE EXPLANATION TO how you get the remeasurment gain under the current method.

thank

Exchange rates were as follows: January 1, 2016 FC1 = $.23 December 31, 2016 FC1 = $.18 Average during 2016 FC1 = $.22 Average during fourth quarter, 2015 FC1 = $.23 Average during fourth quarter, 2016 FC1 = $.19

Financial Statements of BN Corporation

Balance Sheet 12/31/2015 12/31/2016 ——————————————————————————————————– Cash FC 300 FC 500 Accounts receivable (net) 1,300 1,000 Inventories (lower of FIFO cost or market) 1,200 1,500 Fixed assets (net) 9,000 8,000 Total assets FC 11,800 FC 11,000

Accounts payable FC 2,200 FC 2,400 Long-term debt 4,400 3,000 Capital stock 2,000 2,000 Retained earnings 3,200 3,600 Total liabilities and owners’ equity FC 11,800 FC 11,000

Income Statement Year ended 12/31/16 ——————————————————————————————————– Sales FC 10,000 Expenses Cost of sales 5,950 Depreciation (straight-line) 1,000 Other 1,493 8,443 Operating income FC 1,557 Income taxes 467 Net income FC 1,090

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