Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash NGN 15,120 Notes payable NGN 20,160 Inventory 10,800 Common stock 20,160 Land 4,080 Retained earnings 10,080 Building 40,800 Accumulated depreciation (20,400 ) NGN 50,400 NGN 50,400 The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: 2020 Feb. 1 Paid 8,080,000 NGN on the note payable. May 1 Sold entire inventory for 16,800,000 NGN on account. June 1 Sold land for 6,080,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,080,000 NGN cash. Oct. 1 Bought inventory for 20,080,000 NGN cash. Nov. 1 Bought land for 3,080,000 NGN on account. Dec. 1 Declared and paid 3,080,000 NGN cash dividend to parent. Dec. 31 Recorded depreciation for the entire year of 2,040,000 NGN. The U.S dollar ($) exchange rates for 1 NGN are as follows: 2011 NGN 1 = $ 0.0056 2013 1 = 0.0050 August 1, 2019 1 = 0.0070 December 31, 2019 1 = 0.0072 February 1, 2020 1 = 0.0074 May 1, 2020 1 = 0.0076 June 1, 2020 1 = 0.0078 August 1, 2020 1 = 0.0082 September 1, 2020 1 = 0.0084 October 1, 2020 1 = 0.0086 November 1, 2020 1 = 0.0088 December 1, 2020 1 = 0.0090 December 31, 2020 1 = 0.0100 Average for 2020 1 = 0.0090 Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2020?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]):


Cash	NGN	15,120		Notes payable	NGN	20,160
Inventory		10,800		Common stock		20,160
Land		4,080		Retained earnings		10,080
Building		40,800
Accumulated depreciation		(20,400	)
	NGN	50,400			NGN	50,400

The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place:

2020
Feb.	1	Paid 8,080,000 NGN on the note payable.
May	1	Sold entire inventory for 16,800,000 NGN on account.
June	1	Sold land for 6,080,000 NGN cash.
Aug.	1	Collected all accounts receivable.
Sept.	1	Signed long-term note to receive 8,080,000 NGN cash.
Oct.	1	Bought inventory for 20,080,000 NGN cash.
Nov.	1	Bought land for 3,080,000 NGN on account.
Dec.	1	Declared and paid 3,080,000 NGN cash dividend to parent.
Dec.	31	Recorded depreciation for the entire year of 2,040,000 NGN.

The U.S dollar ($) exchange rates for 1 NGN are as follows:


2011	NGN 1	=	$	0.0056
2013	1	=		0.0050
August 1, 2019	1	=		0.0070
December 31, 2019	1	=		0.0072
February 1, 2020	1	=		0.0074
May 1, 2020	1	=		0.0076
June 1, 2020	1	=		0.0078
August 1, 2020	1	=		0.0082
September 1, 2020	1	=		0.0084
October 1, 2020	1	=		0.0086
November 1, 2020	1	=		0.0088
December 1, 2020	1	=		0.0090
December 31, 2020	1	=		0.0100
Average for 2020	1	=		0.0090

Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2020?

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