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		19,600		54,000
Net Property, Plant, and Equipment		40,000		36,600
Totals		59,600		90,600
Accounts and Notes Payable		30,100		32,100
Common Stock		19,900		19,900
Retained Earnings		9,600		38,600
Totals		59,600		90,600

GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2014
Revenues		74,300
Operating Expenses including Depreciation of 3,400 francs		30,200
Net Income		44,100
Dividends Declared and Paid		15,100
Increase in Retained Earnings		29,000

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)

	Your answer is correct.

Translate the year-end balance sheet and income statement of the foreign subsidiary using the current rate method of translation.

		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				$

(b) (NEED HELP)

Prepare a schedule to verify the translation adjustment.

		Swiss Francs		Translation Rate		$
Adjustment for Changes in the Net Asset Position During the YearCumulative Translation Adjustment (debit)Cumulative Translation Adjustment (credit)DividendsExposed Net Asset Position - 1/1Exposed Net Asset Position - 12/31Net Asset Position Translated Using Rate in Effect at Date of TransactionsNet Income				$
Adjustment for Changes in the Net Asset Position During the YearCumulative Translation Adjustment (debit)Cumulative Translation Adjustment (credit)DividendsExposed Net Asset Position - 1/1Exposed Net Asset Position - 12/31Net Asset Position Translated Using Rate in Effect at Date of TransactionsNet Income
Adjustment for Changes in the Net Asset Position During the YearCumulative Translation Adjustment (debit)Cumulative Translation Adjustment (credit)DividendsExposed Net Asset Position - 1/1Exposed Net Asset Position - 12/31Net Asset Position Translated Using Rate in Effect at Date of TransactionsNet Income
Adjustment for Changes in the Net Asset Position During the YearCumulative Translation Adjustment (debit)Cumulative Translation Adjustment (credit)DividendsExposed Net Asset Position - 1/1Exposed Net Asset Position - 12/31Net Asset Position Translated Using Rate in Effect at Date of TransactionsNet Income
Adjustment for Changes in the Net Asset Position During the YearCumulative Translation Adjustment (debit)Cumulative Translation Adjustment (credit)DividendsExposed Net Asset Position - 1/1Exposed Net Asset Position - 12/31Net Asset Position Translated Using Rate in Effect at Date of TransactionsNet Income
Adjustment for Changes in the Net Asset Position During the YearCumulative Translation Adjustment (debit)Cumulative Translation Adjustment (credit)DividendsExposed Net Asset Position - 1/1Exposed Net Asset Position - 12/31Net Asset Position Translated Using Rate in Effect at Date of TransactionsNet Income
Adjustment for Changes in the Net Asset Position During the YearCumulative Translation Adjustment (credit)Cumulative Translation Adjustment (debit)DividendsExposed Net Asset Position - 1/1Exposed Net Asset Position - 12/31Net Asset Position Translated Using Rate in Effect at Date of TransactionsNet Income

(NEED HELP WITH PART B)