ACT506 Critical Thinking Assignment Module 4 Option #2 Consolidation at Acquisition Date of Foreign Subsidiary into the U.S. Parent, Push Corporation on Jan 02, 20x7 Information: 1) Push Corporation purchased Summer British Corp on Jan 02, 20x7, for 100% control. 2) The local currency for Summer Britain Corp is the British Pound. This is the functional currency. 3) The British Subsidiary had revenue of $10,000. Push Corpreceived $10,000 Dollars with a U.S. Company when the exchange rate was $1.20 = (GBP) 1.00. 4) Relevant Spot exchange rates ($/ GBP) (One GBP equals the values at the time) Date Rate 1/2/20x7 1.3 20x7 Average 1.35 10000 1.2 8333.333 20x7 Aver 1.35 Basic Eliminating Entry 01/02/20x7 Debit Credit Common Stock Paid In Capital Retained Earnings Good will Investment 1/2/20x7 Subsidiary US ($) Parent Stock Acquisition Parent Subsidiary Eliminating entries Total Consolidated Statement on 01/02/20x7 DEBIT Credit Debit Credit 1,800,000 20,000 20,000 10,000 100,000 40,000 30,000 40,000 300,000 300,000 -150,000 -200,000 0 0 2,100,000 0 0 210,000 100,000 50,000 500,000 50,000 700,000 50,000 800,000 60,000 2,100,000 210,000