Practice
Check your answer
Write your response and explain your reasoning.
Reperform the Moraine foreign-entity translation. Identify the rate type for each class of account. Compute translated net income and ending retained earnings, then prove the CTA without treating it as cash or current earnings.
Compare your reasoning with the worked answer
Translated revenue of $780,000 less expenses of $700,000 gives $80,000 net income. Opening retained earnings of $190,000 plus net income less $20,000 dividends gives $250,000 ending retained earnings. The independently translated statement elements require a $60,000 CTA.