Par of Chicago acquired all the outstanding capital stock of Sar of London on January 1, 2016,

Question:

Par of Chicago acquired all the outstanding capital stock of Sar of London on January 1, 2016, for $1,120,000.

The exchange rate for British pounds was $1.40 and Sar's stockholders' equity was £800,000, consisting of £500,000 capital stock and £300,000 retained earnings. The functional currency of Sar is the U.S. dollar.

Exchange rates for British pounds for 2016 are as follows:

Current rate January 1, 2016 ................$1.40

Current rate December 31, 2016 ............ 1.50

Average exchange rate for 2016 ............. 1.55

Exchange rate for dividends ................ 1.54

Sar's cost of goods sold consists of £200,000 inventory on hand at January 1, 2016, and purchases of £600,000 less £150,000 inventory on hand at December 31, 2016, that was acquired at an exchange rate of $1.68.

All of Sar's plant assets were on hand when Par acquired Sar, and Sar's other expenses were paid in cash or relate to accounts payable.

Sar's adjusted trial balance at December 31, 2016, in British pounds is as follows:

Debits

Cash .................................... £50,000

Accounts receivable ................. 200,000

Short-term note receivable .......... 50,000

Inventories ............................ 150,000

Land ................................... 300,000

Buildings-net ..................... 400,000

Equipment-net .................... 500,000

Cost of sales ....................... 650,000

Depreciation expense ................ 200,000

Other expenses ....................... 400,000

Dividends ............................ 100,000

.........................................£3,000,000

Credits

Accounts payable .................... £180,000

Bonds payable-10% ............... 500,000

Bond interest payable ................ 20,000

Capital stock ........................... 500,000

Retained earnings ................... 300,000

Sales ................................. 1,500,000

.........................................£3,000,000

REQUIRED:

Prepare a remeasurement worksheet to restate Sar's adjusted trial balance at December 31, 2016, in U.S. dollars.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...