ACCOUNTING FOR BUSINESS COMBINATION

ANSWER THE FOLLOWING PROBLEMS AND PROVIDE STEP-BY-STEP EXPLANATION:

The following is the trial balance as of December 31, 2009 of TKC Company, a British subsidiary of Philippine Co. It has been adjusted to conform to generally accepted accounting principles and is expressed in pounds. Cash E 2,500 Accounts Receivable 4,000 Inventories, at cost 5,500 Prepaid Expenses 750 Property Plant and Equipment 12,000 $ 24,750 Accounts Payable E 3,500 Current Portion of Long-term Debt 500 Long-term Debt 7,500 Accumulated Depreciation 3,000 Ordinary Shore Capital 5,000 Accumulated Profits, 1/1/09 2,500 Sales 90,000 Cost of Sales (20,000) Depreciation Expense (1.500) Other Expenses (5.750] $ 24,750Additional Information: 1. The balance of the Foreign Currency Translation Adjustment account at December 31, 2008 was P50.000 [credit] 2. The peso balance of Accumulated profits at December 31, 2008 was P119,500. 3. When TKC Company was incorporated, the exchange rate was $1 = P67.20. No share capital changes have occurred since then. 4. Exchange rates were as follows: January 1, 2009 18 = P67.40 December 31, 2009 (and last quarter for 2008] 18 = P67.60 Average for 2009 18 = P67.50 5. All receivables, payables, and long-term debts are denominated in pounds. 6. Sales, purchases, and expenses occurred evenly throughout the year. Required: Translate the financial statements of TKC Company into Philippine pesos.Problem 2 On January 1, 2009, Miguel Company acquired for P900,000, a 100 percent interest in the ordinary shore of Moslem Co., a firm in Brunei where the currency is the dollar [8$]. On that date, Moslem's shareholders' equity accounts were as follows: Ordinary Share B$ 20/000 Accumulated Profits B$ 10,000 On December 21, 2009, Moslem's trial balance was Debit - Credit Cash B$ 1,600 Accounts Receivable 2.500 Inventory 4,000 Plant and Equipment 35,000 Accumulated Depreciation 8$ 9/000 Accounts Payable 2,600 Ordinary Shore 20,000 Accumulated Profits 10,000 Sales 30,000 Cost of Sales 17,000 Operating Expense 7,000 Depreciation Expense 3,000 Dividend: 1,500 Total B$ 71,600 8$ 71,600The inventory on January 2, 2008 of 8$ 5,000 was acquired when the exchange rate was 8$1 = P29. The ending inventory was acquired on December 31, 2009. Revenues and expenses were incurred evenly during 2009. Moslem declared and paid dividends of 8$1,800 on October 15, 2009. Spotrates were: January 1, 2009 6$1 = P30 October 15, 2009 8$1 = P32 December 31, 2009 6$1 = P23 2009 average 8$1 = P21 Required: 1. Prepare a schedule translating the December 21, 2009 trial balance from Brunei dollar to Philippine 2. Prepare all the entries on Miguel Company's books that offect the Investment in Moslem Stock account during 2009