On January 1, 2017, the Phillips Company acquired all of the outstanding shares of Standard, Ltd., a U.K. firm, for £8,000,000 in cash. At the end of 2017, the two companies presented the condensed financial statements below.

At date of acquisition, the exchange rate was \($2/£.\) Standard’s inventory and buildings were undervalued by £100,000 and £500,000, respectively. All of the undervalued inventory was sold during the year, and the buildings are depreciated over a 20-year life, straight-line. Other relevant information is as follows:
1. The exchange rate at the end of 2017 was \($2.30/£.\) The average exchange rate for 2017 was \($2.15/£.\)
2. Goodwill impairment during 2017 was £200,000.
3. Phillips reports its Investment in Standard using the complete equity method. However, neither equity in net income of Standard nor Phillips’ share of the translation gain for 2017 have been booked. Intercompany dividends, declared when the exchange rate was \($2.10/£,\) were credited to the investment account.

Required 

Assuming the pound is Standard’s functional currency, prepare a consolidated balance sheet and a consolidated statement of comprehensive income for Phillips and Standard. All Supporting schedules and computations should be in good form.

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Assets Cash and receivables.. Inventory.. Property, plant and equipment, net Investment in Standard Balance Sheets December 31, 2017 Phillips Standard $ 2,100,000 3,000,000 4,000,000 3,000,000 12,000,000 5,000,000 13,900,000 $32,000,000 11,000,000 Total assets Liabilities and Stockholders' Equity Current liabilities... $ 8,000,000 4,000,000 Long-term debt Capital stock 4,000,000 1,000,000 10,000,000 2,000,000 Retained earnings Total liabilities and stockholders' equity 10,000,000 4,000,000 $32,000,000 11,000,000 Statements of Income and Retained Earnings For Year Ended December 31, 2017 Phillips Standard Sales.... $30,000,000 10,000,000 Cost of goods sold. 20,000,000 6,000,000 Depreciation.. 1,000,000 500,000 Other operating expenses 5,000,000 2,000,000 Total expenses 26,000,000 8,500,000 Net income.. 4,000,000 1,500,000 Dividends (2,000,000) (1,000,000) Retained earnings, beginning. 8,000,000 3,500,000 Retained earnings, ending. $10,000,000 4,000,000