Exam 11: Translation and Consolidation of Foreign Operations

Maker Ltd., an American company, acquired US$200,000 of capital assets on January 1, 2018, when the company was established. These assets were being amortized over 10 years on a straight-line basis, with no significant residual value expected. On January 1, 2019, Holdings Inc., a Canadian company with no capital assets of its own, acquired 100% of the outstanding shares of Maker. US$40,000 of the acquisition differential was allocated to the capital assets, which had eight years remaining economic life on the acquisition date. On March 1, 2020, Maker acquired a further $80,000 of capital assets, which had an estimated useful life of eight years from that date. Exchange rates for the period from January 1, 2018 to December 31, 2020 were: Tanuary 1,2018 US \ 1.00=CDN\ 1.05 Tanuary 1,2019 US\ 1.00=CDN\ 1.06 Average for 2019 US \ 1.00= CDN \ 1.0625 December 31,2019 US \ 1.00= CDN \ 1.065 March 1,2020 US \ 1.00= CDN \ 1.068 Average for 2020 US\ 1.00= CDN \ 1.07 December 31,2020 US \ 1.00= CDN \ 1.075 If Maker's functional currency is the same as the parent's, what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2020?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has the same functional currency as ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's cash?

On December 31, 2019, Hilman Enterprises of Montreal paid $12,000,000 for 100% of the outstanding shares of Wilsen Corp of the United States. Wilsen's fair values approximated its book values on that date. Wilsen's comparative balance sheets for 2019 and 2020 are shown below: Balance Sheet as at December 31 (in U.S. Dollars) Current Monetary Assets \ 8,000,000 \ 7,500,000 Inventory \ 2,000,000 \ 3,000,000 Plant and Equipment (Net) \ 1,500,000 \ 1,800,000 Total Assets \ 11,500,000 \ 12,300,000 Current Liabilities \ 1,100,000 \ 2,300,000 Bonds Payable (due Dec 31,2026) \ 5,000,000 \ 5,000,000 Common Shares \4 ,000,000 \4 ,000,000 Retained Earnings \1 ,400,000 \1 ,000,000 Total Liabilities and Equity \1 1,500,000 \1 2,300,000 Income Statement for the Year ended December 31, 2020 Sales \ 5,200,000 Inventory, January 1, 2020 \ 3,000,000 Purchases \ 3,000,000 Inventory, December 31,2020 (\ 2,000,000) Depreciation Expense \ 300,000 Other Expenses \ 400,000 Depreciation Expense \ 300,000 Other Expenses \ 400,000 \ 4,700,000 Net Income \5 00,000 Other Information: Exchange Rates: December 31,2019: US \ 1= CDN \ 1.1850 September 30,2020: US \ 1=CDN\ 1.1975 December 31,2020: US \ 1=CDN\ 1.20 Average for 2020: US \ 1= CDN \ 1.19 Wilsen paid US$100,000 in dividends on September 30, 2020. The inventories on hand at the end of 2020 were purchased when the exchange rate was US$1 = CDN$1.195. Sales, purchases and other expenses occurred evenly throughout the year. Compute Wilsen's exchange gain or loss for 2020 if Wilson's functional currency is the same as Hilman Enterprises' functional currency (i.e., the Canadian dollar).

Maker Ltd., an American company, acquired US$200,000 of capital assets on January 1, 2018, when the company was established. These assets were being amortized over 10 years on a straight-line basis, with no significant residual value expected. On January 1, 2019, Holdings Inc., a Canadian company with no capital assets of its own, acquired 100% of the outstanding shares of Maker. US$40,000 of the acquisition differential was allocated to the capital assets, which had eight years remaining economic life on the acquisition date. On March 1, 2020, Maker acquired a further $80,000 of capital assets, which had an estimated useful life of eight years from that date. Exchange rates for the period from January 1, 2018 to December 31, 2020 were: Tanuary 1,2018 US \ 1.00=\ 1.05 Tanuary 1,2019 US \ 1.00=\ 1.06 Average for 2019 US \ 1.00=\ 1.0625 December 31,2019 \ 1.00=\ 1.065 March 1,2020 \ 1.00=\ 1.068 Average for 2020 \ 1.00=\ 1.07 December 31,2020 \ 1.00=\ 1.075 If Maker's functional currency is the same as the parent's, what amount will be shown for amortization expense on its translated Canadian dollar financial statements as at December 31, 2020?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has the same functional currency as ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's accounts receivable?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: January 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has a different functional currency than ABC Inc.'s functional currency. Which of the following rates would be used to translate US1's income statement items?

What exposure exists when the present value of future cash flows change as a result of changes in exchange rates?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has the same functional currency as ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's dividends?

Maker Ltd., an American company, acquired US$200,000 of capital assets on January 1, 2018, when the company was established. These assets were being amortized over 10 years on a straight-line basis, with no significant residual value expected. On January 1, 2019, Holdings Inc., a Canadian company with no capital assets of its own, acquired 100% of the outstanding shares of Maker. US$40,000 of the acquisition differential was allocated to the capital assets, which had eight years remaining economic life on the acquisition date. On March 1, 2020, Maker acquired a further $80,000 of capital assets, which had an estimated useful life of eight years from that date. Exchange rates for the period from January 1, 2018 to December 31, 2020 were: Tanuary 1,2018 US \ 1.00=CDN\ 1.05 Tanuary 1,2019 US\ 1.00=CDN\ 1.06 Average for 2019 US \ 1.00= CDN \ 1.0625 December 31,2019 US \ 1.00= CDN \ 1.065 March 1,2020 US \ 1.00= CDN \ 1.068 Average for 2020 US\ 1.00= CDN \ 1.07 December 31,2020 US \ 1.00= CDN \ 1.075 If Maker is considered to be a foreign subsidiary where its functional currency is the U.S. dollar (i.e., different than the parent's functional currency), what amount will be shown for capital assets (net) on its translated Canadian dollar financial statements as at December 31, 2019?

Maker Ltd., an American company, acquired US$200,000 of capital assets on January 1, 2018, when the company was established. These assets were being amortized over 10 years on a straight-line basis, with no significant residual value expected. On January 1, 2019, Holdings Inc., a Canadian company with no capital assets of its own, acquired 100% of the outstanding shares of Maker. US$40,000 of the acquisition differential was allocated to the capital assets, which had eight years remaining economic life on the acquisition date. On March 1, 2020, Maker acquired a further $80,000 of capital assets, which had an estimated useful life of eight years from that date. Exchange rates for the period from January 1, 2018 to December 31, 2020 were: Tanuary 1,2018 US \ 1.00=CDN\ 1.05 Tanuary 1,2019 US\ 1.00=CDN\ 1.06 Average for 2019 US \ 1.00= CDN \ 1.0625 December 31,2019 US \ 1.00= CDN \ 1.065 March 1,2020 US \ 1.00= CDN \ 1.068 Average for 2020 US\ 1.00= CDN \ 1.07 December 31,2020 US \ 1.00= CDN \ 1.075 If Maker is considered to be a foreign subsidiary where its functional currency is the U.S. dollar (i.e., different than the parent's functional currency), what amount will be shown for amortization expense on its translated Canadian dollar financial statements as at December 31, 2020?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has a different functional currency than ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's Retained Earnings at the start of the year?

Under the presentation currency translation (PCT) method, which of the following statements is correct?

On December 31, 2019, Hilman Enterprises of Montreal paid $12,000,000 for 100% of the outstanding shares of Wilsen Corp of the United States. Wilsen's fair values approximated its book values on that date. Wilsen's comparative balance sheets for 2019 and 2020 are shown below: Balance Sheet as at December 31 (in U.S. Dollars) Current Monetary Assets \ 8,000,000 \ 7,500,000 Inventory \ 2,000,000 \ 3,000,000 Plant and Equipment (Net) \ 1,500,000 \ 1,800,000 Total Assets \ 11,500,000 \ 12,300,000 Current Liabilities \ 1,100,000 \ 2,300,000 Bonds Payable (due Dec 31,2026) \ 5,000,000 \ 5,000,000 Common Shares \ 4,000,000 \ 4,000,000 Retained Earnings \ 1,400,000 \ 1,000,000 Total Liabilities and Equity \ 11,500,000 \ 12,300,000 Income Statement for the Year ended December 31, 2020 Sales \ 5,200,000 Inventory, January 1,2020 \ 3,000,000 Purchases \ 3,000,000 Inventory, December 31,2020 (\ 2,000,000) Depreciation Expense \ 300,000 Other Expenses \ 400,000 \ 4,700,000 Net Income \ 500,000 Other Information: Exchange Rates: Decerrber 31,2019: US \ 1= CDN \ 1.1850 Septermber 30,2020: US \ 1= CDN \ 1.1975 Decerrber 31,2020: US \ 1= CDN \ 1.20 Average for 2020: US \ 1= CDN \ 1.19 Wilsen paid US$100,000 in dividends on September 30, 2020. The inventories on hand at the end of 2020 were purchased when the exchange rate was US$1 = CDN$1.195. Sales, purchases and other expenses occurred evenly throughout the year. Translate Wilsen's December 31, 2020 Balance Sheet if Wilsen's functional currency is the same as Hilman Enterprises' functional currency (i.e., the Canadian dollar).

Maker Ltd., an American company, acquired US$200,000 of capital assets on January 1, 2018, when the company was established. These assets were being amortized over 10 years on a straight-line basis, with no significant residual value expected. On January 1, 2019, Holdings Inc., a Canadian company with no capital assets of its own, acquired 100% of the outstanding shares of Maker. US$40,000 of the acquisition differential was allocated to the capital assets, which had eight years remaining economic life on the acquisition date. On March 1, 2020, Maker acquired a further $80,000 of capital assets, which had an estimated useful life of eight years from that date. Exchange rates for the period from January 1, 2018 to December 31, 2020 were: Tanuary 1,2018 US \ 1.00=CDN\ 1.05 Tanuary 1,2019 US\ 1.00=CDN\ 1.06 Average for 2019 US \ 1.00= CDN \ 1.0625 December 31,2019 US \ 1.00= CDN \ 1.065 March 1,2020 US \ 1.00= CDN \ 1.068 Average for 2020 US\ 1.00= CDN \ 1.07 December 31,2020 US \ 1.00= CDN \ 1.075 If Maker is considered to be a foreign subsidiary where its functional currency is the U.S. dollar (i.e., different than the parent's functional currency), what amount will be shown for amortization expense on its translated Canadian dollar financial statements as at December 31, 2019?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has a different functional currency than ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's Assets and Liabilities?

On December 31, 2019, Hilman Enterprises of Montreal paid $12,000,000 for 100% of the outstanding shares of Wilsen Corp of the United States. Wilsen's fair values approximated its book values on that date. Wilsen's comparative balance sheets for 2019 and 2020 are shown below: Balance Sheet as at December 31 (in U.S. Dollars) Current Monetary Assets \ 8,000,000 \ 7,500,000 Inventory \ 2,000,000 \ 3,000,000 Plant and Equipment (Net) \ 1,500,000 \ 1,800,000 Total Assets \ 11,500,000 \ 12,300,000 Current Liabilities \ 1,100,000 \ 2,300,000 Bonds Payable (due Dec 31,2026) \ 5,000,000 \ 5,000,000 Common Shares \ 4,000,000 \ 4,000,000 Retained Earnings \1 ,400,000 \1 ,000,000 Total Liabilities and Equity \1 1,500,000 \1 2,300,000 Income Statement for the Year ended December 31, 2020 Sales \ 5,200,000 Inventory, January 1, 2020 \ 3,000,000 Purchases \ 3,000,000 Inventory, December 31,2020 (\ 2,000,000) Depreciation Expense \ 300,000 Other Expenses \ 400,000 \ 4,700,000 Net Income \ 500,000 Other Information: Exchange Rates: December 31,2019: US \ 1= CDN \ 1.1850 September 30,2020: US \ 1=CDN\ 1.1975 December 31,2020: US \ 1=CDN\ 1.20 Average for 2020: US \ 1= CDN \ 1.19 Wilsen paid US$100,000 in dividends on September 30, 2020. The inventories on hand at the end of 2020 were purchased when the exchange rate was US$1 = CDN$1.195. Sales, purchases and other expenses occurred evenly throughout the year. Translate Wilsen's 2020 Income Statement if Wilson's functional currency is the same as Hilman Enterprises' functional currency (i.e., the Canadian dollar).

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has a different functional currency than ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's Dividends paid during the year?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has the same functional currency as ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's current liabilities?

If the functional currency of the foreign operation is the same as the parent's functional currency, which of the following statements is correct?

ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired January 1, 2020. US1 submitted its financial statements for 2020 to ABC. Selected exchange rates in effect throughout 2020 are shown below: Tanuary 1,2020: US \ 1= CDN \ 0.815 December 31,2020: US \ 1= CDN \ 0.8175 Average for 2020: US \ 1= CDN \ 0.825 Date of Purchase of Inventory on Hand: US \ 1= CDN \ 0.83 Date Dividends were declared: US \ 1= CDN \ 0.8125 US1 financial results for 2020 were as follows: US1 Financial Statements At December 31, 2020 (in U.S. dollars) Income Statement: Sales \ 5,000,000 Cost of Sales \ 3,500,000 Depreciation Expense \ 150,000 Bond Interest Expense \ 100,000 Other Expense \ 750,000 Net Income \ 500,000 Statement of Retained Earnings: January 1, 2020: \ 400,000 Net Income \ 500,000 Dividends \ 100,000) December 31,2020: \ 800,000 Balance Sheet Cash \ 1,200,000 Accounts Receivable \ 1,900,000 Inventory \ 700,000(\ 500,000 January 1, 2020) Plant and Equipment (net) \ 400,000 Current Liabilities \ 4,200,000 Bonds Payable \ 2,000,000 Common Shares \ 1,000,000 Retained Earnings \ 800,000 \ 4,200,000 Sales, purchases, bond interest, and other expenses occurred evenly throughout the year. US1 is considered to be a foreign subsidiary that has the same functional currency as ABC Inc.'s functional currency. Which of the following rates would be used to translate the company's bonds payable?