A Foreign Subsidiary Operates in a Highly Inflationary Economy Relevant Exchange Rates Are as Follows:
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A foreign subsidiary operates in a highly inflationary economy.The company's December 31, 2017, trial balance includes the following:
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$\begin{array}{ll}\text { Equipment:}\\\text { Acquired on June 1,2016 } & 800,000\quad \mathrm{FC} \\\text { Acquired on October } 1,2017 & 600,000 \quad\mathrm{FC}\\\text { Inventory: }\\\text {Valued at lower cost or market}\\\text {Market Value}&182,000 \quad \mathrm{FC}\\ \text {A cost of \( 184,000 \mathrm{FC} \) represents \( 84,000 \mathrm{FC} \) acquired}\\\text {on December 1,2017 , and \( 100,000\quad \mathrm{FC} \) acquired on}\\\text {October 1,2017.}\\\text {Gain on sale of land:}\\\text {This represents a gain from selling land that was}\\\text {acquired on June 1,2016 , at a cost of \( 50,000 \mathrm{FC} \),}\\\text {on October 1,2017}&100,000\quad \mathrm{FC}\end{array}$

Relevant exchange rates are as follows:
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$$\begin{array} { l r } \text { Date } & \text { Rate } \\\text { June } 1,2016 & \$ 0.69 \\\text { July } 1,2016 & \$ 0.68 \\\text { October } 1,2017 & \$ 0.71 \\\text { December } 1,2017 & \$ 0.72 \\\text { December } 31,2017 & \$ 0.74 \\\text { 2017 average } & \$ 0.70\end{array}$$ Required:
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a.Discuss the criteria that must be satisfied in order to qualify as a highly inflationary economy.?
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b.Discuss how the re-measurere-measurement of statements of companies operating in such economies affects net income.?
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c.Calculate the dollar value of the trial balance accounts as of December 31, 2017.?
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