Translationand Remeasurement of Depreciable Assets
Massmart, the secondlargest retailer in Africa, is a subsidiary of Wal-Mart Inc., aU.S. company. Massmart reports its accounts in its local currency,the rand (R). Wal-Mart’s fiscal year ends January 31. On February1, 2018, Massmart reports facilities with original cost of R500million and accumulated depreciation of R280 million in itsnoncurrent assets, as follows:
• Buildings acquiredat a cost of R175 million when the exchange rate was $0.15/R, withaccumulated depreciation of R100 million. The buildings are beingdepreciated on a straight-line basis over 25 years.
• Equipment acquiredat a cost of R325 million when the exchange rate was $0.12/R, withaccumulated depreciation of R180 million. The equipment is beingdepreciated on a straight-line basis over 10 years.
Additional exchangerates:
| February 1, 2018 | $0.10 |
| Average for fiscal 2019 | 0.08 |
| January 31, 2019 | 0.07 |
Massmart still holdsthese facilities at January 31, 2019.
Required
a. Assume thatMassmart’s functional currency is the rand. Calculate Massmart’stranslated facilities, at cost, and related accumulateddepreciation, at January 31, 2019, and its translated depreciationexpense for fiscal 2019.
b. Now assume thatMassmart’s functional currency is the U.S. dollar. CalculateMassmart’s remeasured facilities, at cost, and related accumulateddepreciation, at January 31, 2019, and its remeasured depreciationexpense for fiscal 2019.
Enter answers usingall zeros (do not abbreviate to millions or thousands).
| | a.Translated | b.Remeasured |
|---|
| Facilities, at cost | | Answer | Answer |
| Accumulated depreciation | | Answer | Answer |
| Depreciation expense | | Answer | Answer |
