Reference no: EM133010746

Learning Corporation acquired 100% of the common stock of Flex Corporation, a US Corporation on January 1, 2016. The following accounts from Flex's adjusted trial balance in dollars at December 31, 2016 are as follows:

Debits:

Cash $10,000
Accounts Receivable 20,000
Equipment (acquired March 1, 2015), net 11,900
Cost of sales 4,000
Depreciation expense 900
Operating expenses 2,700
Dividends 500
Total $50,000

Credits:

Accounts payable $8,000
Unearned rent 4,000
Capital stock 20,000
Retained earnings, January 1 8,000
Sales 10,000
Total $50,000

The relevant exchange rates in Philippine pesos for US Dollars are as follows:

1. $1 P50 March 1, 2015 (when the common stock was issued and equipment was acquired.)
2. $1 P52 average exchange rate for 2016.
3. $1 P51 at the date the dividends were declared.
4. $1 P55 at the date the dividends were paid.
5. $1 P54 at the end of 2016.

• The Philippine peso equivalent of retained earnings, January 1 amounted to 392,000. Assume that all sales, cost of sales and expenses were incurred
• evenly throughout the year.
• If the functional currency is not the currency of a hyperinflationary economy (Closing Rate Method/Net Investment Method), compute the Translation reserve- gain (loss) for the year

REQUIREMENT:

Problem 1: Compute the Translation reserve- gain (loss) for the year