Prepare the companys consolidated accounts for x-two

Reference no: EM13903803

Non-autonomous foreign operation: translation issues

Ace, a South Korean electronics company, has a subsidiary, Diamond, in Puerto Grande, a Caribbean island. Diamond assembles computer hardware for sale in the region. Although Diamond keeps its accounts in doblón, the local currency, its functional currency is the South Korean won as it purchases parts and receives financing from its South Korean parent.

As a result of depressed economic conditions in the industry in x2, Diamond is forced to mark down its inventory to market value at 31 December. In addition, a year-end impairment review reveals that the recoverable amount of its plant and equipment is below the carrying amount.

(In millions of doblón) At 31 Dec x2

Inventory, at cost 30

Valuation adjustment -2

Inventory, at LOCOM 28

Plant and equipment, at cost 120

Accumulated depreciation -24

Accumulated impairment losses -15

Plant and equipment, net 81

Puerto Grande is an oil and gas producer and the doblón has strengthened against the won and other currencies in recent years as new reserves have been discovered. Key exchange rate data are given below:

Start x1 (purchase of plant and equipment)	162 won : 1 doblón
Average in Qtr 3, x2 (purchase of end-x2 inventory)	189
Average for x2	186
31 December x2	196

Required

Mae-Young, Ace's controller, is preparing the company's consolidated accounts for x2. She wants to know how to translate Diamond's fixed assets and inventory into won for consolidation purposes. Advise her.

Reference no: EM13903803

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