Exercise 13-4

On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2014 financial statements stated in Swiss francs are given below.

GRANT MANAGEMENT CONSULTANTS Comparative Balance Sheets January 1 and December 31, 2014
		Jan. 1		Dec. 31
Cash and Receivables		20,200		53,900
Net Property, Plant, and Equipment		40,300		37,100
Totals		60,500		91,000
Accounts and Notes Payable		29,700		32,500
Common Stock		20,100		20,100
Retained Earnings		10,700		38,400
Totals		60,500		91,000

GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2014
Revenues		73,000
Operating Expenses including Depreciation of 3,200 francs		30,500
Net Income		42,500
Dividends Declared and Paid		14,800
Increase in Retained Earnings		27,700

Direct exchange rates for Swiss franc are:

		Dollars per Franc
January 1, 2014		$0.5987
December 31, 2014		0.5321
Average for 2014		0.5654
Dividend declaration and payment date		0.5810

(a)

Translate the year-end balance sheet and income statement of the foreign subsidiary using the current rate method of translation. (Round answers to 0 decimal places, e.g. 5,125. Enter loss and debit cumulative translation adjustment using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).)

		Swiss Francs		Translation Rate		$
Consolidated Income and Retained Earnings Statement
DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues				$
DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues
DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues
DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues
DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues
DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues
Balance Sheet
Total
Total

Exercise 13-4 On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2014 financial statements stated in Swiss francs are given below GRANT MANAGEMENT CONSULTANTS Comparative Balance Sheets January 1 and December 31, 2014 Jan. 1 Dec. 31 Cash and Receivables 20,200 53,900 Net Property, plant, and Equipment 40,300 37.100 Totals 60,500 91,000 Accounts and Notes Payable 29,700 32,500 Common Stock 20,100 20,100 Retained Earnings 10.700 38,400 Totals 60.500 91,000 - GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2014 Revenues 73,000 Operating Expenses including Depreciation of 3,200 francs 30,500 Net Income 42,500 Dividends Declared and Paid 14,800 Increase in Retained Earnings 27,700 Direct exchange rates for Swiss franc are: January 1, 2014 December 31, 2014 Average for 2014 Dividend declaration and payment date Dollars per Franc $0.5987 0.5321 0.5654 0.5810 (a) Translate the year-end balance sheet and income statement of the foreign subsidiary using the current rate method of translation. (Round answers to 0 decimal places, e.g. 5,125. Enter loss and debit cumulative translation adjustment using either a negative sign prece Swiss Translation Francs Rate Consolidated Income and Retained Earnings Statement $ Balance Sheet Total Total