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Calculate the translation adjustment for ramirez

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Reference no: EM132966346

On January 1, 2021, Baker Co., a U.S. corporation with the U.S. dollar as its functional currency, established Ramirez Co. as a subsidiary. Ramirez is located in the country of Lalique, and its functional currency is the Trinket (T).

Ramirez engaged in the following transactions during 2021:

January 1, 2021
Issued common stock for 600,000 Trinkets.
June 25, 2021 Sold a patent at a gain of 75,000 Trinkets.
August 1, 2021 Paid dividends of 53,000 Trinkets.

Ramirez's operating revenues and expenses for 2021 were 900,000 Trinkets and 750,000 Trinkets, respectively. The appropriate exchange rates were:

January 1, 2021 1 Trinket = $3.50
June 25, 2021 1 Trinket = $3.20
August 1, 2021 1 Trinket = $3.70
December 31, 2021 1 Trinket = $3.80
Average for 2021 1 Trinket = $3.40

Required:

Problem a. Calculate the translation adjustment for Ramirez. (Round your answers to the nearest whole dollar.)

Problem b. What is the purpose of the translation adjustment?

Reference no: EM132966346

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