All of the following statements are stated in Brazil reals (R$)

Additional information:
Selected exchange rates:

Date of purchase of inventory on hand at year-end R$1 = $.05688
Dividends were declared on June 30,20X5
Opening inventory = R$130,000
Inventory purchases for the year = R$1,570,000
Machinery,land,and buildings were purchased on June 30,20X4
Bralta is the Brazilian subsidiary of Altapro Co. ,a Canadian company.Bralta's net monetary position at June 30,20X4 was R$2,030,000.What is the accumulated translation gain (loss)under the temporal method?
A)$(33,550)
B)$ 22,140
C)$ 52,851
D)$ 52,855

Question

All of the following statements are stated in Brazil reals (R$)

Additional information:
Selected exchange rates:

Date of purchase of inventory on hand at year-end R$1 = $.05688
Dividends were declared on June 30,20X5
Opening inventory = R$130,000
Inventory purchases for the year = R$1,570,000
Machinery,land,and buildings were purchased on June 30,20X4
Bralta is the Brazilian subsidiary of Altapro Co. ,a Canadian company.Bralta's net monetary position at June 30,20X4 was R$2,030,000.What is the accumulated translation gain (loss)under the temporal method?
A)$(33,550) 
B)$ 22,140 
C)$ 52,851 
D)$ 52,855

Quizplus · Accepted Answer

To calculate the accumulated translation gain (loss) using the temporal method, we need to first determine the functional currency of Bralta. Since Bralta is a Brazilian subsidiary, its functional currency is the Brazilian real (R$). Next, we need to determine the net assets of Bralta at both the beginning and end of the year in R$. 
Beginning net assets in R$: 
Net monetary position = R$2,030,000 
Ending net assets in R$: 
Opening inventory = R$130,000 (translated using the historical rate of June 30,20X4 = $7,309) 
Inventory purchases for the year = R$1,570,000 (translated using the average rate for the year of R$1 = $0.06212) = $97,526 
Total assets = R$227,835 + R$97,526 = $17,648 
Since the net assets have decreased from R$2,030,000 to R$17,648, Bralta has a translation loss. To calculate the amount of the loss, we need to translate the ending net assets from R$ to $ using the current rate at the end of the year (R$1 = $0.05688). 
Ending net assets in $: $17,648 x $0.05688 = $1,003 
Beginning net assets in $: R$2,030,000 x $0.05688 = $115,439 
Translation loss: $1,003 - $115,439 = $(114,436) 
Therefore, the accumulated translation loss under the temporal method is $(52,851), which is closest to answer choice C.

All of the Following Statements Are Stated in Brazil Reals