Assume the same facts as Problem 11-8 with the following exceptions:

a. Tobac?s functional currency is the U.S. dollar.

b. Balfour?s investment in Tobac consists of the following:

Initial investment (33,000,000 FC x $0.55) . . . . . . . . . . . . . . . . . . . . . . . . . $18,150,000

Last 6 months, 2015 income (including the re-measurement gain or loss). . .1,610,000

2016 income (including the re-measurement gain or loss) . . . . . . . . . . . . . . .1,860,000

2017 income (excluding the re-measurement gain or loss) . . . . . . . . . . . . . . .3,495,363

Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,115,363

The balance has not yet been adjusted for the 2017 re-measurement gain or loss.

c. The trial balances for Tobac and Balfour are the same as in Problem 11-8 with the following exceptions:

Balfour

Investment in Tobac. . . . . . . . . . . . . . . . . . . . . . . . $25,115,363

Retained earnings, January 1, 2017. . . . . . . . . . . .(5,090,000)

Subsidiary income . . . . . . . . . . . . . . . . . . . . . . . . . (3,495,363)

Required

Remembering that Tobac?s functional currency is the U.S. dollar, translate Tobac?s trial balance and prepare a consolidating worksheet. Remember that transactions traceable to pre-July 1, 2015, should be remeasured at the rate in effect on July 1, 2015. This is because on July 1, 2015, Balfour acquired its interest in Tobac and established the dollar basis of net assets existing at that time.

Problem 11-9 TOBAC, INC. - TRIAL BALANCE TRANSLATION - DECEMBER 31, 2017 BALANCE IN FC ACCOUNT Cash Net Accounts Receivable Inventory Depreciable Assets Accumulated Depreciation Due to Balfour Other Liabilities Common Stock Paid-in Capital in Excess of Par Retained Earnings, 1/1/X7 Sales Cost of Sales Depreciation Expense Int.Exp., Bal.Loan (accrued 12/31) Exchange Gain - Balfour Loan Other Expenses Cumulative Translation Adjustment Totals 3,087,385 12,000,000 8,000,000 34,000,000 (12,300,000) (2,087,385) (3,700,000) (19,000,000) (8,480,000) (7,520,000) (40,000,000) 27,600,000 3,300,000 118,154 (30,769) 5,012,615 0 EXCHG. RATE BALANCE IN DOLLARS 0 0 NoteA NoteB NoteB 0 0 0 0 NoteC 0 NoteD Note B 0 0 0 0 Use this space to translate Inventory, Depreciable Assets, Accumulated Depreciation, Retained Earnings, Cost of Sales and Depreciation Expense Note A Ending Inventory Consists of: Note B Depreciable assets consists of the following: Note C The translated balance of retained earnings is as follows: Note D Cost of sales consists of: Trial Balance in $ Eliminations & Adjustments Get this from column from part 1. Cash Net Accounts Receivable Inventory Due from Tobac Investment in Tobac Depreciable Assets Accumulated Depreciation Due to Balfour Other Liabilities Common Stock Common Stock Paid-in Capital in Excess of Par Paid-in Capital in Excess of Par Retained Earnings.,1/1/X7 Retained Earnings.,1/1/X7 Balfour 4,463,200 15,350,000 16,300,000 1,356,800 25,115,363 0 0 0 68,000,000 (42,000,000) 0 0 0 0 (27,000,000) (35,000,000) 0 (2,000,000) 0 (5,090,000) Sales (98,000,000) Cost of Sales 64,000,000 Depreciation Expense 8,076,800 Interest Exp. on Balfour Loan Exch. on Gain on Balfour Loan Other Expenses 10,000,000 Interest Income (76,800) Subsidiary Income (3,495,363) Cumulative Translation Adjustment Totals 0 Consolidated Net Income Eliminations and Adjustments: Get this from column from part 1. Dr. Tobac 0 0 0 0 0 0 0 0 0 26,961,463 N DOLLARS ned Earnings, Cost of ons & Adjustments Consolidated Consolidated Cr. I/S B/S 26,961,463 0 0