Florida Chocolate Inc. was first opened as a sole proprietor in $20$x$2$ under the name Alexandrias Chocolates. The company produced $4$ specialty chocolate products using an old family recipe, which only the owner, Alexandria Vierra, knows. The company started as a small homebased business.

In $20$x$4$ Alexandria decided to expand the business, opened a factory in Ft$.$ Lauderdale Florida and converted the business to a corporation named Florida Chocolate Inc. Due to the huge success of the business she decided to expand to Europe in $20$x$6,$ opening another factory in England. This factory is run by Alexandrias brother Nelson. The third factory was open in Brazil in $20$x$9$ and is run by Alexandrias sister Laura.Project Information:

$*$The recording currency and functional currency of Florida Chocolate Inc. is the U$.$S$.$ Dollar.

On January $1,20$x$6$ Florida Chocolate Inc acquired $100\%$ of Brazil Cos outstanding stock to open a factory in Brazil. The following facts relate to the acquisition:

Florida Chocolate Inc paid $$1,000,000$ cash for Brazil Co Industries.

On January $1,20$x$6,$ Brazil Co had the following assets and liabilities on its balance sheet: Cash $-$ $$375,000,$ Inventory $-$ $$1,000,000,$ Land $-$ $$100,000,$ Buildings & equipment $-$ $$625,000,$ Accounts Payable $-$ $$300,000,$ and Notes Payable $-$ $$1,500,000.$

Fair market values of all Brazil Co$\text{'}$ assets and liabilities approximate their costs with the exception of:

o Inventory $-$ $$950,000$

o Land $-$ $$300,000$

o Buildings & Equipment $-$ $$975,000$

For the year ended December $31,20$x$6,$ Florida Chocolate Inc had the following other assets and liabilities on its balance sheet: Cash $-$ $$825,000,$ Inventory $-$ $$1,250,000,$ Land $-$ $$500,000,$ Buildings & equipment $-$ $$1,500,000,$ Accounts payable $-$ $$500,000,$ Notes payable $-$ $$2,000,000.$ Retained earnings before closing the income statement was $$2,500,000.$

Florida Chocolate Inc. received income from Brazil Co of $$125,000,$ and dividends from Brazil Co of $$50,000.$

Florida Chocolate Inc $\text{'}$s sales for the year were $$3,000,000.$ Cost of goods sold was $$1,900,000,$ and its operating expenses were $$875,000.$

Brazil Co$\text{'}$ sales for the year were $$1,000,000.$ Cost of goods sold was $$650,000,$ and its operating expenses were $$225,000.$

Assume that net income increased Brazil Co$\text{'}$ cash balances. Dividends were paid out of Brazil Co$\text{'}$ cash balances.

Ignore amortization expense. There were no intercompany transactions between Florida Chocolate Inc. and Brazil Co during $20$x$6.$

Due to the huge success of the business she expanded to Europe in $20$x$7,$ opening another factory in England. The recording currency of the England factory is the Euro and the functional currency is the Pound sterling. Part $1$:

This week's assignment will be a draft of Part $1$ of the portfolio project. The final version of Part $1$ of the project is due, along with Part $2,$ in their final versions, with Part $3$ as the Portfolio Project for this class.

Prepare the allocation schedule, consolidation worksheet, and journal entries for the initial consolidation with Brazil Co$.$ in $20$x$6.$ Prepare the journal entries required at year end, and the consolidation entries. $($Assume Brazil uses the U$.$S$.$ Dollar as their recording and functional currency.$)$