Preston Company is a U.S. corporation that maintains a 100%…

Preston Company is a U.S. corporation that maintains a 100% investment in Seida, Inc., a non-US company.

Seida’s financial statements are on the page following this page.

At 12/31/20×1, Preston Company will prepare consolidated financial statements that include Seida, Inc.

Therefore, they will have to convert Seida’s financials from the local currency amounts to U.S. dollar amounts. Below are the relevant exchange rates and some additional information:

Relevant Exchange Rates and additional information

Exchange rate for when common stock issued $ 2.08

Exchange rate for when property, plant and equipment acquired $ 1.98

Retained earnings translated as of Jan. 1, 20×1 $ 396,520

Inventory acquired evenly throughout the year

Dividends were declared on Apr. 1, 20×1

Relevant currency exchange rates:

January 1, 20×1 $ 1.67

April 1, 20×1 $ 1.59

September 1, 20×1 $ 1.63

December 31, 20×1 $ 1.60

Weighted average rate for 20×1 $ 1.62

Additional information:

• The gain on sale was associated with a 9/1/20×1 transaction.

• The 12/31/20×0 financial statements reported an adjustment to convert the subsidiary’s financial statements for consolidation was $85,000.

Required

A. Assuming the LCU is Seida’s functional currency, prepare a schedule in which you apply the appropriate rate to convert Seida’s financials into the U.S. dollar amounts. (Note: Please use an Excel schedule for this item)

B. Suppose:

a. Seida’s local currency is the South African rand and

b. Seida’s functional currency is the Canadian dollar.

Briefly explain the steps (and applicable method used, i.e., current rate or temporal method) required in converting from (1) Seida’s local currency, the rand, to the Canadian dollar, and (2) from the Canadian dollar to Preston’s reporting currency, the U.S. dollar. Your explanation should address the accounting for the translation or remeasurement adjustment, as applicable.