c. Following are selected balance sheet accounts for the parent:

Income statement									Balance sheet
Sales						$30,310,000			Assets
Cost of goods sold						(21,217,000)			Cash						$7,297,685
Gross profit						9,093,000			Accounts receivable						3,879,680
Equity income						219,780			Inventory						5,880,140
Operating expenses						(5,758,900)			Equity investment						1,593,111
Net income						$3,553,880			Property, plant, and equipment, net						31,316,292
															$49,966,908
Statement of retained earnings									Liabilities and stockholders' equity
BOY retained earnings						$23,940,718			Current liabilities						$2,427,830
Net income						3,553,880			Long-term liabilities						8,750,000
Dividends						(957,628)			Common stock						2,053,580
Ending retained earnings						$26,536,970			APIC						9,546,376
									Retained earnings						26,536,970
Statement of accum. comp. income:									Cumulative translation adjustment						652,152
BOY cumulative translation adjustment						$248,062									$49,966,908
Current-year translation gain (loss)						404,090
EOY cumulative translation adjustment						$652,152

Assume the following information: The purchase price for the subsidiary included an AAP asset relating to a Patent that the parent estimated was worth BRL300,000 more than its book value on the subsidiarys balance sheet. The patent is being amortized at the rate of BRL30,000 per year and the BOY unamortized AAP related to the Patent is BRL270,000.

1. Compute the balance of the Equity Investment account of $1,593,111 on the parents balance sheet.

Use a negative sign with answers that reduce the equity investment balance.

BOY Common stock	Answer
BOY APIC	Answer
BOY Retained earnings	Answer
BOY Unamortized AAP	Answer
BOY Cumulative translation adjustment	Answer
Equity income	Answer
Dividends	Answer
Translation adjustment	Answer
Other comprehensive income	Answer
Equity investment balance	$1,593,111

2. Compute the equity income of $219,780 reported by the parent in its income statement.

Use a negative sign with your answer, if it reduces the income.

Net income	Answer
AAP amortization	Answer
Equity income	$219,780

d. Using your translated subsidiary financial statements from Part a and the parents financial data provided in Part c, prepare the consolidation spreadsheet for the year.

Use negative signs with your answers in the Consolidated column for: Cost of goods sold, Operating expenses and Dividends.

	Parent		Subsidiary			Debit		Credit				Consolidated
Income statement
Sales	$30,310,000		Answer									Answer
Cost of goods sold	(21,217,000)		Answer									Answer
Gross profit	9,093,000		Answer									Answer
Equity income	219,780				[C]	Answer						Answer
Operating expenses	(5,758,900)		Answer		[D]	Answer						Answer
Net income	$3,553,880		Answer									Answer
Statement of retained earnings
BOY retained earnings	$23,940,718		Answer		[E]	Answer						Answer
Net income	3,553,880		Answer									Answer
Dividends	(957,628)		Answer					Answer		[C]		Answer
Ending retained earnings	$26,536,970		Answer									Answer
Statement of accum. comp. income:
BOY cumulative translation adjustment	$248,062		Answer		[E]	Answer						Answer
Current-year translation gain (loss)	404,090		Answer		[C]	Answer		Answer		[D]		Answer
EOY cumulative translation adjustment	$652,152		Answer									Answer
Balance sheet
Assets
Cash	$7,297,685		Answer									Answer
Accounts receivable	3,879,680		Answer									Answer
Inventory	5,880,140		Answer									Answer
Equity investment	1,593,111							Answer		[C]		Answer
								Answer		[E]
								Answer		[A]
Property, plant, and equipment, net	31,316,292		Answer		[A]	Answer						Answer
					[D]	Answer						-
	$49,966,908		Answer									Answer
Liabilities and stockholders' equity
Current liabilities	$2,427,830		Answer									Answer
Long-term liabilities	8,750,000		Answer									Answer
Common stock	2,053,580		Answer		[E]	Answer						Answer
APIC	9,546,376		Answer		[E]	Answer						Answer
Retained earnings	26,536,970		Answer									Answer
Cumulative translation adjustment	652,152		Answer			-		-				Answer
	$49,966,908		Answer			Answer		Answer				Answer