Case 1. Consolidation Worksheet, Prepared after Remeasurement of Foreign Statements Pentagon Inc. purchased 80% of the outstanding stock of Sydney Company, located in Australia, on January 1, 2018. The purchase price in Australian dollars (A$) was A$500.000, and the differential was allocated to patent, which is amortized over 10-year period. Sydney Company's trial balance on December 31, 2018, in Australian dollars (A$) as follows: Item Debits Credits Cash A$ 110.250 Accounts Receivable (net) 180.000 Inventory 215.000 Plant and Equipment 600.000 Accumulated Depreciation A$ 150.000 Accounts Payable 134.500 Payable to Pentagon Inc. 27.000 Interest Payable 7.500 Bonds Payable 250.000 Premium on Bonds 14.250 Common Stock 225.000 Retained Earnings, Jan 1 100.000 Sales 1.447.500 Cost of Goods Sold 825.000 Depreciation Expense 60.000 Operating Expenses 328.750 Interest Expense 14.250 Dividends Paid 22.500 Total AS 2.355.750 AS 2.355.750 Additional information: 1. The dividends were declared and paid on April 1, 2018 2. Exchange rate were as follows: January 1, 2018 April 1, 2018 December 31, 2018 2018 Average A$ 1 = 0,70 A$ 1 = 0,67 A$ 1 = 0,60 A$ 1 = 0,65 A December, 31 2018, trial balance for Pentagon Inc. follows: Credits Item Cash Accounts Receivable (net) Receivable from Sydney Inventory Plant and Equipment Investment in Sydney Comp Cost of Goods Sold Depreciation Expense Operating Expenses Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Interest Payable Common Stock Retained Earnings, Jan 1 Sales Income from Subsidiary Total Debits $ 95.000 350.000 16.200 320.000 1.250.000 446.360 1.500.000 70.000 510.000 5.000 125.000 $ 225.000 150.000 5.000 1.250.000 449.140 2.500.000 108.420 S 4.687.560 S 4.687.560 Required: 1. Prepare a schedule remeasuring the December 31, 2018, trial balance of Sydney Company from Australian dollars to U.S. dollars. 2. Prepare a schedule providing a proof of the remeasurement gain or loss. The subsidiary's net monetary liability position on January 1, 2018, was A$200.000 3. Prepare the entries that Pentagon would record in 2018 for its investment in Sydney Company 4. Prepare a set of eliminating entries, in general journal form, for the entries required to prepare a three-part consolidation worksheet as of December 31, 2018. 5. Prepare a three-part consolidation worksheet as of December 31, 2018. Case 1. Consolidation Worksheet, Prepared after Remeasurement of Foreign Statements Pentagon Inc. purchased 80% of the outstanding stock of Sydney Company, located in Australia, on January 1, 2018. The purchase price in Australian dollars (A$) was A$500.000, and the differential was allocated to patent, which is amortized over 10-year period. Sydney Company's trial balance on December 31, 2018, in Australian dollars (A$) as follows: Item Debits Credits Cash A$ 110.250 Accounts Receivable (net) 180.000 Inventory 215.000 Plant and Equipment 600.000 Accumulated Depreciation A$ 150.000 Accounts Payable 134.500 Payable to Pentagon Inc. 27.000 Interest Payable 7.500 Bonds Payable 250.000 Premium on Bonds 14.250 Common Stock 225.000 Retained Earnings, Jan 1 100.000 Sales 1.447.500 Cost of Goods Sold 825.000 Depreciation Expense 60.000 Operating Expenses 328.750 Interest Expense 14.250 Dividends Paid 22.500 Total AS 2.355.750 AS 2.355.750 Additional information: 1. The dividends were declared and paid on April 1, 2018 2. Exchange rate were as follows: January 1, 2018 April 1, 2018 December 31, 2018 2018 Average A$ 1 = 0,70 A$ 1 = 0,67 A$ 1 = 0,60 A$ 1 = 0,65 A December, 31 2018, trial balance for Pentagon Inc. follows: Credits Item Cash Accounts Receivable (net) Receivable from Sydney Inventory Plant and Equipment Investment in Sydney Comp Cost of Goods Sold Depreciation Expense Operating Expenses Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Interest Payable Common Stock Retained Earnings, Jan 1 Sales Income from Subsidiary Total Debits $ 95.000 350.000 16.200 320.000 1.250.000 446.360 1.500.000 70.000 510.000 5.000 125.000 $ 225.000 150.000 5.000 1.250.000 449.140 2.500.000 108.420 S 4.687.560 S 4.687.560 Required: 1. Prepare a schedule remeasuring the December 31, 2018, trial balance of Sydney Company from Australian dollars to U.S. dollars. 2. Prepare a schedule providing a proof of the remeasurement gain or loss. The subsidiary's net monetary liability position on January 1, 2018, was A$200.000 3. Prepare the entries that Pentagon would record in 2018 for its investment in Sydney Company 4. Prepare a set of eliminating entries, in general journal form, for the entries required to prepare a three-part consolidation worksheet as of December 31, 2018. 5. Prepare a three-part consolidation worksheet as of December 31, 2018