7. Translation and Consolidation of Foreign Subsidiary (35 points) Assume that our company owns a subsidiary operating in France and accounts for its investment in the subsidiary using the equity method. The subsidiary maintains is books in Euros () as its functional currency. Following are the subsidiary's financial statements (in ) for the most recent year: The relevant exchange rates for the $US value of the Euro () are as follows: a. Translate the subsidiary's, income statement, statement of retained earnings, balance sheet, and statement of cash flows from Euros () into $US (assume that the BOY Retained Earnings for the subsidiary is $1,483,860. b. Compute the end Cumulative Translation Adjustment directly, assuming a BOY balance of $865,140. c. Refer to the selected financial statement accounts for the parent, below. Assume the following information: The purchase price for the subsidiary included an AAP asset relating to Land that the parent estimated was worth 180,000 more than book value on the subsidiary's balance sheet. The exchange rate in effect when the subsidiary was acquired was $1.20:1. i. Compute the balance of the Equity Investment account of $4,873,750 on the parent's balance sheet. ii. Prepare the consolidation spreadsheet for the year. / la 7. Translation and Consolidation of Foreign Subsidiary (35 points) Assume that our company owns a subsidiary operating in France and accounts for its investment in the subsidiary using the equity method. The subsidiary maintains is books in Euros () as its functional currency. Following are the subsidiary's financial statements (in ) for the most recent year: The relevant exchange rates for the $US value of the Euro () are as follows: a. Translate the subsidiary's, income statement, statement of retained earnings, balance sheet, and statement of cash flows from Euros () into $US (assume that the BOY Retained Earnings for the subsidiary is $1,483,860. b. Compute the end Cumulative Translation Adjustment directly, assuming a BOY balance of $865,140. c. Refer to the selected financial statement accounts for the parent, below. Assume the following information: The purchase price for the subsidiary included an AAP asset relating to Land that the parent estimated was worth 180,000 more than book value on the subsidiary's balance sheet. The exchange rate in effect when the subsidiary was acquired was $1.20:1. i. Compute the balance of the Equity Investment account of $4,873,750 on the parent's balance sheet. ii. Prepare the consolidation spreadsheet for the year. / la