Consolidating an International Subsidiary, Year of Acquisition

On February $1,2022,$ 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 $31,2023$ 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 $90,00030,000$

Plant and equipment, net $776,500355,000$

Investment in Superbarn $110,600--$

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 Superbarn $10,900--$

Cost of goods sold $1,000,000400,000$

Operating expenses $485,00085,000$

$ $0$ A$ $0$

Exchange rates:

February $1,2022$ $$0\mathrm{.}77/$A$

Average for fiscal $20230\mathrm{.}75/$A$

January $31,20230\mathrm{.}70/$A$

Goodwill arising from the acquisition of Superbarn was impaired by A$$5$ million in fiscal $2023.$

a$.$ Prepare a working paper to consolidate the trial balances of Pathway and Superbarn for fiscal $2023.$

$1.$ Translate Superbarn's January $31,2023$ trial balance.

Use negative signs with Cr $($credit balance$)$ answers.

Trial Balance

$($in thousands$)$ A$

Dr$($Cr$)$

$$/$A$ $

Dr$($Cr$)$

Cash and receivables A$ $5,000$ Answer

$0\mathrm{.}7$

Answer

$3500$

Inventories $30,000$ Answer

$0\mathrm{.}75$

Answer

$22500$

Property and equipment, net $355,000$ Answer

$0\mathrm{.}75$

Answer

$266250$

Liabilities $(345,000)$ Answer

$0\mathrm{.}75$

Answer

$-258750$

Capital stock $(10,000)$ Answer

$0\mathrm{.}77$

Answer

$-7700$

Retained earnings, February $1(20,000)$ Answer

$0\mathrm{.}7$

Answer

$-14000$

Sales revenue $(500,000)$ Answer

$0\mathrm{.}75$

Answer

$-375000$

Cost of goods sold $400,000$ Answer

$0\mathrm{.}75$

Answer

$300000$

Operating expenses $85,000$ Answer

$0\mathrm{.}75$

Answer

$63750$

Translation gain or loss $($below$)$ Answer

A$ $0$ Answer

Do not use negative signs with any of your answers.

Using the drop$-$down menu, select the appropriate answer to indicate a translation gain or translation loss.

Translation Gain$/$Loss Schedule $($in thousands$)$ A$ $$/$A$ $

Net assets, beginning Answer

Answer

Answer

Net income Answer

Answer

Answer

Answer

Net assets, ending Answer

Answer

Answer

Answer

Answer

$2.$ Prepare consolidation working paper elimination journal entries $($in thousands$)$:

Consolidation Journal

Ref. Description Debit Credit

$($C$)$ Answer

Answer

Answer

Answer

Answer

Answer

Investment in Superbarn Answer

Answer

$($E$)$ Capital stock Answer

Answer

Answer

Answer

Answer

Answer

Answer

Answer

$($R$)$ Identifiable intangibles Answer

Answer

Goodwill Answer

Answer

Answer

Answer

Answer

Answer

Answer

Answer

$($O$)$ Answer

Answer

Answer

Answer

Answer

Answer

Identifiable intangibles Answer

Answer

Goodwill Answer

Answer

$3.$ Complete Consolidation Working Paper

Use negative signs with your credit $($Cr$)$ balance answers in the Superbarn and Consolidated Balances columns.

Consolidation Working Paper

Accounts Taken From Books Eliminations

$($in thousands$)$ Pathway

Dr $($Cr$)$ Superbarn

Dr $($Cr$)$ Debit Credit Consolidated Balances

Dr $($Cr$)$

Cash and receivables $ $15,000$ Answer

Answer

Inventories $90,000$ Answer

Answer

Plant and equipment, net $776,500$ Answer

Answer

Investment in Superbarn $110,600--$ Answer

$($C$)$ Answer

Answer

$($E$)--$

Answer

$($R$)--$

Identifiable intangibles $----($R$)$ Answer

Answer

$($O$)$ Answer

Goodwill $----($R$)$ Answer

Answer

$($O$)$ Answer

Liabilities $(874,000)$ Answer

Answer

Capital stock $(25,000)$ Answer

$($E$)$ Answer

Answer

Retained earnings, February $1(85,000)$ Answer

$($E$)$ Answer

Answer

Dividends $2,000--$ Answer

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

Answer

Equity in net income$-$Superbarn $(6,000)--($C$)$ Answer

Answer

Equity in OCL$-$Superbarn $10,900--$ Answer

$($C$)$ Answer

Cost of goods sold $1,000,000$ Answer

Answer

Operating expenses $485,000$ Answer

$($O$)$ Answer

Answer

Translation loss Answer

$($R$)$ Answer

Answer

$($O$)$ Answer

Total $ $0$ Answer

Answer

Answer

Answer

b$.$ Present the consolidated balance sheet and statement of comprehensive income for fiscal $2023,$ in good form.

Do not use negative signs with your answers in the consolidated statement of comprehensive income below.

Pathway Inc. and Subsidiary

Consolidated Statement of Comprehensive Income

For the Year Ended January $31,2023$

$($in thousands$)$

Sales revenue Answer

Cost of goods sold Answer

Gross margin Answer

Operating expenses Answer

Net income Answer

Translation loss $($other comprehensive loss$)$ Answer

Comprehensive income Answer

Do not use negative signs