Assume that XYZ Company purchased a 100 interest in a foreign subsidiary on 1 1 20X2 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 20 2 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 20 2 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 20 2 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 66 Functional Currency British Pounds FOREIGN 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 Foreign subsidiary adjusted trial balance at 12 31 20X2 (Functional Currency British Pounds) Exchange U S Account Pounds Rate Dollars Cash (100,0001 1 7 170,000 Accounts Receivable 60,000 1 7 85,000 Inventory 55,0001 1 7 93,500 Buildings 200,000 1 7 340 000 Equipment 80,000 1 7 136,0001 Cost of Sales 150,000 1 651 247,500 ciation Expense Buildings 10,000 1 65 16,500 Depreciation Expense Equipment 4,000 1 65 6,600 Other Operating Expenses 25,000 1 65 41,250 Dividends 30,000 51,000 Total Debits E704,000 1187350 Accum Depreciation Buildings E20,000 1 7 34,000 Accum de depreciation Equipment 4,000 1 7 6,800 Notes payable 40,0001 1 7 68,000 Common stock 200,000 1 7 340,000 Retained Earnings 90,000 calculated 153,0001 Sales 350,000 1 65 577,500 Foreign Currency Translation Difference 8,050 Total Credits E704,000 1187350

Question

Assume that XYZ Company purchased a 100  interest in a foreign subsidiary on 1 1 20X2  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 20 2  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 20 2  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 20 2  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 66 Functional Currency   British Pounds FOREIGN 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 Foreign subsidiary adjusted trial balance at 12 31 20X2  (Functional Currency   British Pounds) Exchange U S  Account Pounds Rate Dollars           Cash (100,0001 1 7                  170,000  Accounts Receivable 60,000  1 7  85,000  Inventory 55,0001 1 7  93,500            Buildings 200,000  1 7  340 000                 Equipment 80,000  1 7  136,0001 Cost of Sales 150,000 1 651 247,500  ciation Expense  Buildings 10,000 1 65  16,500  Depreciation Expense  Equipment 4,000 1 65  6,600  Other Operating Expenses 25,000 1 65  41,250                 Dividends 30,000  51,000          Total Debits E704,000 1187350  Accum  Depreciation  Buildings E20,000 1 7  34,000 Accum  de  depreciation  Equipment 4,000  1 7  6,800                            Notes payable 40,0001 1 7  68,000            Common stock 200,000  1 7  340,000  Retained Earnings 90,000  calculated 153,0001                                                             Sales 350,000  1 65  577,500                   Foreign Currency Translation Difference 8,050 Total Credits E704,000 1187350

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Assume that XYZ Company purchased a 100% interest in a foreign subsidiary on 1/1/20X2. There have been no changes in the common stock since the

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