03.

ctoria Company (a US based company) established a subsidiary in Vietnam on January 1,

2022, by investing $1,000,000. The subsidiary’s opening balance sheet (in VND) was as follows:

Balance Sheet
January 1, 2022
VND VND

Cash 20,000,000,000

Inventory 3,000,000,000 Capital Stock 23,000,000,000

Total Assets 23,000,000,000 Total Liabilities and Equity 23,000,000,000

Relevant exchange rate for 2022 are as follows:

Date Exchange rate

VND/USD
Jan 1, 2022 23,000 VND/USD
Average for 2022 23,200 VND/USD
Rate when property and equipment were acquired on Jan 15, 2022 23,150 VND/USD
Rate when dividends were declared on December 1, 2022 23,300 VND/USD
Average for the month of December, 2022 23,350 VND/USD
December 31, 2022 23,400 VND/USD

The subsidiary’s financial statements for the year ended December 31, 2022 are as follows.
Ending inventory was acquired evenly throughout the month of December
Required: Translate the Vietnamese subsidiary’s financial statements into USD using
Current rate method.

Income statement
for 2022
VND Translation Rate USD
Sales 19,000,000,000
Less: Costs of goods sold 10,500,000,000
Less: Selling and
3,500,000,000
administrative expenses
Less: Depreciation expense 220,000,000
Less: Interest expense 250,000,000
Income before taxes 4,530,000,000 Calculation
Less: Income tax 900,000,000
Net income 3,630,000,000 Calculation

Retained earnings statement

for 2022
VND Translation Rate USD
Retained Earnings, 1/1/2022 0
From Income
3,630,000,000
Add: Net Income Statement

Less: Dividends 1,630,000,000

2,000,000,000 Calculation
Retained Earnings, 31/12/2022

Balance sheet
December 31, 2022

VND Translation Rate USD

Assets
19,330,000,00
Cash 0

Account Receivable 6,900,000,000

Inventory 3,960,000,000

Property and equipment 4,400,000,000

Less: Accumulated
Depreciation 220,000,000
34,370,000,00
Total Assets 0
Liabilities and Equity

Account Payable 7,370,000,000

Long-term Debt 2,000,000,000

 23,000,000,00
Capital Stock 0
From Retained
Retained Earnings 2,000,000,000 Earnings Statement
Cumulative translation Calculation
adjustment
34,370,000,00
Total Liabilities and Equity 0