Reference no: EM133037480

Question - Maples Corporation is a Canadian subsidiary of a U.S. parent company. Shown below is the company's local currency income statement for 20X1. All transactions the company entered into should be considered to have occurred evenly throughout the year, except for the loss on storm damage, which occurred on September 30, 20X1, and resulted in the destruction of certain fixed assets. The U.S. parent translates Maples' financial statements into U.S. dollars using the current rate method.

(in millions of Canadian dollars) Sales $480.7 Cost of goods sold (211.1) Loss on storm damage (25.0) Selling, general, and administrative expenses (103.0) Net income $141.6

Exchange rates between the Canadian dollar and the U.S. dollar (stated as the U.S. dollar value of one Canadian dollar) at various times were as follows:

Historical exchange rate when inventory that was sold in 20X1 was purchased 0.85 Historical exchange rate when property that was destroyed in storm was purchased 0.98 Average for 20X1 0.76 December 31, 20X0 0.80 September 30, 20X1 0.74 December 31, 20X1 0.73

Required -

1. What is the amount of net income that would appear in Maples' 20X1 U.S. dollar income statement after translation under the current rate method?

2. Suppose Maple's retained earnings at December 31, 20X0, was C$519.1 million. It was US$472.0 million as shown in the company's U.S. dollar balance sheet on the same date. Maples did not declare or pay any dividends in 20X1. What amount of retained earnings would it report in its December 31, 20X1, U.S. dollar balance sheet?