1. Provide the journal entries related to the two sale transactions and any hedging transactions associated with these transactions. 2. Make any necessary changes to convert TanCorps financial statements to be compliant with U.S. GAAP. 3. Update the financial statements of TanCorp and TechSmart (parent) to reflect these transactions and conversions. 4. Translate TanCorps financial statements to USD. 5. Prepare TechSmarts consolidated financial statements for Y1. 
TanCorp capitalized 350,400 Yuan in development costs on December 31, Y1 as part of their Other Intangible Asset balance. Because this expenditure was made on 12/31/Y1, no amortization was recorded during Y1. These changes affect TanCorp's financial income but not their taxable income reported to the Chinese government. Thus, these changes will have no effect on TanCorp's income tax expense. Financial statement translation: TanCorp's 12/31/Y1 income statement and balance sheet are presented in Chinese Yuan (see Excel template, available in Canvas). TechSmart's parent-only financial statements are also presented in the Excel template. TechSmart management has deemed that the Yuan is deemed to be the functional currency of TanCorp. All stock was issued at 1/1/YO, when TanCorp was incorporated as a subsidiary. Financial statement consolidation: TechSmart owns 100% of TanCorp. TanCorp is TechSmart's only majority-owned subsidiary. TanCorp declared and paid 12,000,000 Yuan in dividends on 10/31/Y1, all to TechSmart. At the time of acquisition on 1/1/YO, TanCorp's translated stockholders' equity section was as follows: Common stock: $7,163,573 APIC - common stock: $8,861,806 Retained earnings: $0 TanCorp is a wholly-owned subsidiary. When it was acquired, TechSmart paid consideration exactly equal to the book value of TanCorp. There were no intracompany transactions between the two companies during the year other than the dividend declared by TanCorp. TechSmart uses the initial value method to account for this investment during the year. Because TanCorp began operations on 1/1/YO and paid no dividends in YO, the 1/1/Y1 balance of retained earnings is equal to TanCorp's YO net income. TanCorp capitalized 350,400 Yuan in development costs on December 31, Y1 as part of their Other Intangible Asset balance. Because this expenditure was made on 12/31/Y1, no amortization was recorded during Y1. These changes affect TanCorp's financial income but not their taxable income reported to the Chinese government. Thus, these changes will have no effect on TanCorp's income tax expense. Financial statement translation: TanCorp's 12/31/Y1 income statement and balance sheet are presented in Chinese Yuan (see Excel template, available in Canvas). TechSmart's parent-only financial statements are also presented in the Excel template. TechSmart management has deemed that the Yuan is deemed to be the functional currency of TanCorp. All stock was issued at 1/1/YO, when TanCorp was incorporated as a subsidiary. Financial statement consolidation: TechSmart owns 100% of TanCorp. TanCorp is TechSmart's only majority-owned subsidiary. TanCorp declared and paid 12,000,000 Yuan in dividends on 10/31/Y1, all to TechSmart. At the time of acquisition on 1/1/YO, TanCorp's translated stockholders' equity section was as follows: Common stock: $7,163,573 APIC - common stock: $8,861,806 Retained earnings: $0 TanCorp is a wholly-owned subsidiary. When it was acquired, TechSmart paid consideration exactly equal to the book value of TanCorp. There were no intracompany transactions between the two companies during the year other than the dividend declared by TanCorp. TechSmart uses the initial value method to account for this investment during the year. Because TanCorp began operations on 1/1/YO and paid no dividends in YO, the 1/1/Y1 balance of retained earnings is equal to TanCorp's YO net income
