Business, 30.10.2019 22:31 itsyourgirll

Topic: translation and remeasurement gains and losses on january 1, 2020, a hong kong subsidiary was acquired by a u. s. company. the subsidiary’s trial balances for the beginning and end of 2020 appear below, in hong kong dollars (hk$): january 1, 2020 december 31, 2020 dr (cr) dr (cr) cash and receivables hk$ 2,000 hk$ 1,600 plant assets, net 10,000 9,000 liabilities (9,000) (7,100) capital stock (500) (500) retained earnings, beginning (2,500) (2,500) sales revenue (8,000) depreciation expense 1,000 other operating expenses _6,500 hk$ 0 hk$ 0 sales revenue and other operating expenses occurred evenly during 2020. exchange rates (u. s. dollars/hk$) are as follows: january 1, 2020 $0.120 average for 2020 0.130 december 31, 2020 0.136

required

a. the subsidiary’s functional currency is the hong kong dollar. calculate the translation gain or loss for 2020. specify whether it is a gain or loss.

b. the subsidiary’s functional currency is the u. s. dollar. calculate the remeasurement gain or loss for 2020. specify whether it is a gain or loss.

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Topic: translation and remeasurement gains and losses on january 1, 2020, a hong kong subsidiary wa...