The Australian subsidiary of a U.S. parent reports the following plant assets (acquired in a previous year) at December 31, 2020:
•Buildings acquired at a cost of A$10,000 when the exchange rate was $0.65/A$, with accumulated depreciation of A$4,000. The buildings are being depreciated on a straight-line basis over 20 years.
•Equipment acquired at a cost of A$40,000 when the exchange rate was $0.62/A$, with accumulated depreciation of A$15,000. The equipment is being depreciated on a straight-line basis over 10 years.
2020 exchange rates are as follows (US$/A$):
$$\begin{array} { l r }
\text { January 1, 2020 } & \$ 0.77 \
\text { Average for 2020 } & 0.78 \
\text { December 31, 2020 } & 0.80
\end{array}$$ Required
a. Assume the subsidiary's functional currency is the Australian dollar. Calculate the subsidiary's translated buildings and equipment, at cost, and related accumulated depreciation, at December 31, 2020, and its translated depreciation expense for 2020.
b. Assume the subsidiary's functional currency is the U.S. dollar. Calculate the subsidiary's remeasured buildings and equipment, at cost, and related accumulated depreciation, at December 31, 2020, and its remeasured depreciation expense for 2020.

Question

The Australian subsidiary of a U.S. parent reports the following plant assets (acquired in a previous year) at December 31, 2020:
•Buildings acquired at a cost of A$10,000 when the exchange rate was $0.65/A$, with accumulated depreciation of A$4,000. The buildings are being depreciated on a straight-line basis over 20 years.
•Equipment acquired at a cost of A$40,000 when the exchange rate was $0.62/A$, with accumulated depreciation of A$15,000. The equipment is being depreciated on a straight-line basis over 10 years.
2020 exchange rates are as follows (US$/A$):
 $$\begin{array} { l r } 
\text { January 1, 2020 } & \$ 0.77 \
\text { Average for 2020 } & 0.78 \
\text { December 31, 2020 } & 0.80
\end{array}$$ Required
a. Assume the subsidiary's functional currency is the Australian dollar. Calculate the subsidiary's translated buildings and equipment, at cost, and related accumulated depreciation, at December 31, 2020, and its translated depreciation expense for 2020.
b. Assume the subsidiary's functional currency is the U.S. dollar. Calculate the subsidiary's remeasured buildings and equipment, at cost, and related accumulated depreciation, at December 31, 2020, and its remeasured depreciation expense for 2020.

Quizplus · Accepted Answer

The Answer of The Australian subsidiary of a U.S. parent reports the following plant assets (acquired in a previous year) at December 31, 2020:
•Buildings acquired at a cost of A$10,000 when the exchange rate was $0.65/A$, with accumulated depreciation of A$4,000. The buildings are being depreciated on a straight-line basis over 20 years.
•Equipment acquired at a cost of A$40,000 when the exchange rate was $0.62/A$, with accumulated depreciation of A$15,000. The equipment is being depreciated on a straight-line basis over 10 years.
2020 exchange rates are as follows (US$/A$):
 $$\begin{array} { l r } 
\text { January 1, 2020 } & \$ 0.77 \
\text { Average for 2020 } & 0.78 \
\text { December 31, 2020 } & 0.80
\end{array}$$ Required
a. Assume the subsidiary's functional currency is the Australian dollar. Calculate the subsidiary's translated buildings and equipment, at cost, and related accumulated depreciation, at December 31, 2020, and its translated depreciation expense for 2020.
b. Assume the subsidiary's functional currency is the U.S. dollar. Calculate the subsidiary's remeasured buildings and equipment, at cost, and related accumulated depreciation, at December 31, 2020, and its remeasured depreciation expense for 2020.