Consolidating an International Subsidiary, Year of Acquisition

On February 1, 2019, Pathway Inc., a U.S. company, acquired all of the outstanding shares of Superbarn Supermarkets, an Australian chain, for A$150 million in cash. Superbarn's assets and liabilities were reported at amounts approximating fair value, but it had previously unrecorded intangible assets (5-year life, straight-line) valued at A$10 million. Superbarn's functional currency is the Australian dollar (A$). Pathway uses the complete equity method to record its investment in Superbarn on its own books. The January 31, 2020 trial balances of the two companies are below.

(in thousands) Pathway Dr (Cr) Superbarn Dr (Cr)

Cash and receivables $ 15,000 A$ 5,000

Inventories 90,000 30,000

Plant and equipment, net 776,500 355,000

Investment in Superbarn 118,650 --

Liabilities (874,000) (345,000)

Capital stock (25,000) (10,000)

Retained earnings, February 1 (85,000) (20,000)

Dividends 2,000 --

Sales revenue (1,500,000) (500,000)

Equity in net income of Superbarn (6,000) --

Equity in other comprehensive loss of 2,850 --

Superbarn

Cost of goods sold 1,000,000 400,000

Operating expenses 485,000 85,000

$ 0 A$ 0

Exchange rates:

February 1, 2019 $0.77/A$

Average for fiscal 2020 0.75/A$

January 31, 2020 0.70/A$

Goodwill arising from the acquisition of Superbarn was impaired by A$5 million in fiscal 2020.

a. Prepare a working paper to consolidate the trial balances of Pathway and Superbarn for fiscal 2020.

b. Prepare translation gain or translation loss schedule (In thousand) Do not use negative signs

c. Prepare consolidation working paper elimination journal entries (in thousands)

d. Complete Consolidation Working Paper

e. Present the consolidated balance sheet and statement of comprehensive income for fiscal 2020, in good form

f. Prepare consolidated balance sheet