Watson Company has a subsidiary in the country of Alonza
Watson Company has a subsidiary in the country of Alonza where the local currency unit is the
kamel (KM). On December 31, 2012, the subsidiary has the following balance sheet: The
subsidiary acquired the inventory on August 1, 2012, and the land and buildings in 2000. It
issued the common stock in 1998. During 2013, the following transactions took place:2013Feb.
1 Paid 5,000 KM on the note payable.May 1 Sold entire inventory for 15,000 KM on
account.June 1 Sold land for 5,000 KM cash.Aug. 1 Collected all accounts receivable.Sept. 1
Signed long-term note to receive 6,000 KM cash.Oct. 1 Bought inventory for 12,000 KM
cash.Nov. 1 Bought land for 4,000 KM on account.Dec. 1 Paid 3,000 KM cash dividend to
parent.Dec. 31 Recorded depreciation for the entire year of 2,000 KM.The exchange rates for 1
KM are as follows:1998 . . . . . . . . . . . . . . . . . . . . . . . . . . KM 1 5 $0.242000 . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 1 5 0.21August 1, 2012 . . . . . . . . . . . . . . . . . . . . . . 1 5 0.31December 31,
2012 . . . . . . . . . . . . . . . . . . . 1 5 0.32February 1, 2013 . . . . . . . . . . . . . . . . . . . . . 1 5 0.33May
1, 2013 . . . . . . . . . . . . . .. . . . . . . . . . . 1 5 0.34June 1, 2013 . . . . . . . . . . . . . .. . . . . . . . . . . 1 5
0.35August 1, 2013 . . . . . . . . . . . .. . . . . . . . . . . 1 5 0.37September 1, 2013 . . . . . . . . . . . . . . . .
. . . . 1 5 0.38October 1, 2013 . . . . . . . . . . . . . . . . . . . . . . 1 5 0.39November 1, 2013. . . . . . . . .
. . . . . . . . . . . . 1 5 0.40December 1, 2013 . . . . . . . . . .. . . . . . . . . . . 1 5 0.41December 31,
2013 . . . . . . . . . . . . . . . . . . . . 1 5 0.42Average for 2013. . . . . . . . . . . . . . . . . . . . . . 1 5 0.37a. If
this is a translation, what is the translation adjustment determined solely for 2013?b. If this is a
re-measurement, what is the re-measurement gain or loss determined solely for 2013?View
Solution: Watson Company has a subsidiary in the country of Alonza
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