Sunsquare Company was created as a wholly owned subsidiary of Times Corporation (a US based company) on January 1, 2021.
On that date, Times Corporation invested USD50,000 in Sunsquare's capital stock. Given the exchange rate on that date of 1400 Won per USD.
Sunsquare's Balance sheet at Jan 1, 2021 in Won as follows:
Balance sheet at Jan 1, 2021
Won
Cash 70,000,000
Total assets 70,000,000
Capital stock 70,000,000
Total liabilities and equity 70,000,000
Relevant USD exchange rates for the Won for 2021 are as follows:
January 1, 2021 1400 Won/USD
Average for 2021 1420 Won/USD
1410 Won/USD
1415 Won/USD
1425 Won/USD
Average for the month of December 2021 1430 Won/USD
December 31, 2021 1440 Won/USD
Sunsquare's Won denominated financial statements for the year ended December 31, 2021 are as follows:
Income statement for 2021
Won
Sales 55,000,000 1,420
COGS (30,000,000) 1420
Selling and administrative expenses (11,000,000)
Depreciation expense (1,000,000)
Interest expense (2,000,000)
Income before tax 11,000,000
Income taxes (2,200,000)
Net income 8,800,000
Statement of Retained Earnings for 2021
Won
Retained earnings, 1/1/2021 0
Add: Net income 8,800,000
Less: Dividend (4000000)
Retained earnings, 31/12/2021 4,800,000
Won
Cash 30,000,000
Account receivable 15,000,000
Rate when PPE were acquired and long-
term debt was incurred on Jan 10, 2021
Rate when capital was increased Feb 25,
2021
Rate when dividends were declared. Dec 1,
2021
