On January 1, 2010, Cayce Corporation acquired 100 percent of Simbel Company for consideration paid of $126,000, which was equal to fair value. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the cost method. Any excess of fair value over book value is attributable to undervalued land on Simbel’s books. Simbel had no retained earnings at the date of acquisition. Following are the 2011 financial statements for the two operations. Information for Cayce is in U.S. dollars ($) and for Simbel is in Egyptian pounds (£E).

Additional Information • During 2010, the first year of joint operation, Simbel reported income of £E 163,000 earned evenly throughout the year. Simbel paid a dividend of £E 30,000 to Cayce on June 1 of that year. Simbel also paid the 2011 dividend on June 1.
• On December 9, 2011, Simbel classified a £E 10,000 expenditure as a rent expense, although this payment related to prepayment of rent for the first few months of 2012.
• The exchange rates for 1 £E are as follows:

Translate Simbel’s 2011 financial statements into U.S. dollars and prepare a consolidation worksheet for Cayce and its Egyptian subsidiary. Assume that the Egyptian pound is the subsidiary’s functional currency.

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Cayce Corporation Simbel Company E 800,000 Sales.. Cost of goods sold Salary expense Rent expense Other expenses Dividend income from Simbel Gain on sale of fixed asset, 10/1/11 Net income Retained earnings, 1/1/11 Net income $200,000 (93,800) (420,000) (19,000) (74,000) (7,000) (46,000) (21,000) (59,000) 13,750 -0- $ 72,950 -0- 30,000 E 231,000 $318,000 E 133,000 72,950 Dividends paid (24,000) 231,000 (50,000) Retained earnings, 12/31/11 $366,950 E 314,000