Answer: Remeasurement loss of $21,970
Explanation:
The figures will have to be converted from Euros to US$ for the calculation.
The relevant exchange rate will be the rate on the date of the transaction.
Amount Exchange rate $Amount
Opening cash 528,000 1.14 601,920
Increase in Cash assets:
Sale of inventory 160,000 1.20 192,000
688,000 793,920
Decrease in cash assets:
Acquisition of warehouse 300,000 1.14 (342,000)
Purchase of inventory 100,000 1.18 (118,000)
Transfer to parent 10,000 1.18 (11,800)
Ending net cash assets 278,000 322,120
Remeasurement gain(loss) at 31 December = Ending net cash assets at current rate - Ending net cash assets
= (278,000 * 1.08) - 322,120
= 300,240 - 322,120
= ($21,970)
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