Reference no: EM131572537

Question - Ginvold Co. began operating a subsidiary in a foreign country on January 1, 20X1 by acquiring all of the common stock for §50,000 stickles, the local currency. This subsidiary immediately borrowed §120,000 on a 5-year note with 10% interest payable annually beginning on January 1, 20X2. A building was then purchased for §170,000 on January 1, 20X1. This property had a 10-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for 3 years to a group of local doctors for §6,000 per month. By year-end, payments totaling §60,000 had been received.

On October 1, §5,000 were paid for a repair made on that date and it was the only transaction of this kind for the year. A cash dividend of §6,000 was transferred back to Ginvold at December 31, 20X1.

The functional currency for the subsidiary was the stickle (§). Currency exchange rates were as follows:

January 1, 20X1

§1 = $2.40

October 1, 20X1

§1 = $2.22

December 31, 20X1

§1 = $2.16

Average for 20X1

§1 = $2.28

(A) Show on an income statement for this subsidiary in stickles.

(B) Translate these amounts into U.S. dollars.