Assume that XYZ Company purchased a 100% interest in a foreign subsidiary on 1/1/20*2. There have been no changes in the common stock since the acquisition on 1/1/20X2. The only change in buildings since acquisition has been depreciation. The equipment was purchased on 7/1/20X2. The subsidiary is using a 10-year life and has taken a half year of depreciation for 20X2. The accounts receivable were derived from sales that took place throughout 20X2. The note payable was issued on 1/1/20X2. Inventory is calculated on a FIFO basis. The ending inventory was purchased in the last quarter of 20X2. Purchases of inventory amounting to 200,000 pounds took place evenly throughout the year. Dividends were paid on 7/1/20X2. The following is a list of exchange rates for British Pounds: Pounds U.S.$ 1/1/20X2 1 pound Equals $ 1.60 12/31/20X2 1 pound Equals $ 1.70 Average 20X2 1 pound Equals $ 1.65 Average 4th quarter 20X2 1 pound Equals $ 1.68 7/1/20X2 1 pound Equals $ 1.66Foreign subsidiary adjusted trial balance at 12/31/20X2: (Functional Currency = British Pounds) U.S. Account Pounds Exchange Rate Dollars Cash E100,000: -- - - - - - - Accounts Receivable 50,000; Inventory 65,0001 Buildings 200,000; Equipment 80,000: Cost of Sales 150,000; Depreciation Expense: Buildings 10,000; Depreciation Expense: Equipment 4,000; Other Operating Expenses 25,000: Dividends 30,000; Total Debits $704,000 Accum. Depreciation: Buildings E20,000: - - - - - Accum. depreciation: Equipment 4,000; Notes payable 40,000: Common stock 200,000; - - - - - --- - --i- Retained Earnings 90,000: Sales 350,000; - - - - - -- - Total Credits E704,000FOREIGN SUBSIDIARY'S FINANCIAL STATEMENTS (IN U.S. $'s) FOR 20X2: (Functional Currency = British Pounds) COMPREHENSIVE. INCOME STATEMENT: Net Income OCI: Translation Gain/(Loss) Comprehensive Income STATEMENT OF RETAINED EARNINGS: BALANCE SHEET Assets: Total Assets Liabilities: Owners' Equity