(Answered) Question - nbspbraco corporation is a subsidiary of telco

Accounting

Question - Braco Corporation is a subsidiary of Telco Inc. in Mexico. It was established before 1 January 2010.

Braco's balance sheet items as of 31 December 2010, in pesos:

Cash 1,500 Accounts payable 3,000

Accounts rec. 1,500 Long-term debt 5,000

Inventory 2,500 Share Capital 3,000

Fixed assets 8,000 Retained earnings 1,500

Accum. depr. 1,000

Braco's income statement items for 2010, in pesos:

Sales 21,000 Depr. exp 1,000

COGS 15,000 Interest exp. 500

S, G, &A exp. 2,500 Income tax exp. 500

Additional Information:

(i) There was no beginning inventory.

(ii) Inventory that is carried at cost was acquired evenly during the last quarter of 2010.

(iv) Purchases were made consistently throughout year.

(v) Share Capital was issued and paid on 1 January 2010.

(vi) Retained Earnings opening balance is 0.

(vii) Dividend paid of 500 pesos at Dec 21, 2010 with exchange of $0.084

(viii) Relevant exchange rates (U.S. dollar per Mexican peso):

January 1, 2010 $0.110

Average rate for 2010 $0.096

Average rate for 4th quarter 2010 $0.091

December 31, 2010 $0.081

Required: Demonstrate the translation of Braco's financial statements into USD in accordance with U.S. GAAP at Dec 31, 2010 using current rate method.

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