Hello!

So I'm working on international accounting 5140 at the university of Utah.

Specifically, Foreign Currency Consolidation of statements. (current rate method vs. temporal rate method, etc.)

I have attached the instructions to this project and what I have so far, but for some reason I cannot get the adjustment right for Scenario B and Scenario C. I think I may have something wrong, and I can't find the error. Also, it's due in 4 and a half hours so I don't have much time to figure it out.

Could you please help me get these translated statements to balance with each other??

Anthony Bivens u0692230 Foreign Consolidations Project UDC Financials December 31 Year 3 Income Statement Sales COGS Dep Exp - Equipment Dep Exp - Building R&D Exp Other Exp (incl. Taxes) Net Income Plus Retained Earnings, 1/1/Y3 Less: Dividends Paid Retained Earnings, 12/31/Y3 Exchange Rates for Year 1 33,000,000 (21,780,000) (2,291,714) (1,598,350) (1,350,000) (1,450,000) 4,529,936 6,526,482 (1,000,000) 10,056,418 Balance Sheet Cash Accounts Receivable Inventory Equipment Less: accumulated deprec. Building Less: accumulated deprec. Land Total Assets 9,723,375 3,500,000 10,956,250 16,042,000 (5,148,857) 31,967,000 (4,048,350) 4,500,000 67,491,418 Accounts Payable Long-term Note Payable Common Stock Additional paid-in capital Retained Earnings Cumulative Translation Adjusment Total 5,435,000 21,500,000 500,000 30,000,000 10,056,418 67,491,418 Exchange Rates for Year 2 Exchange Rates for Year 3 Exchange Rates for Year 1 January 1, Y1 Weighted Average for Y1 Average for Q4 12/31/Y1 0.32 0.36 0.37 0.38 Exchange Rates for Year 2 January 1, Y2 February 1, Y2 Weighted Average for Y2 Average for last 6 months Y2 12/31/Y2 0.38 0.39 0.395 0.42 0.44 Exchange Rates for Year 3 January 1, Y3 February 14, Y3 March 1, Y3 Weighted Average for Y3 Average for last 6 months of Y3 12/31/Y3 0.44 0.475 0.48 0.466 0.484 0.5 Balance Sheet December 31, Year 3 Assets Cash A/R Inventory Equipment Accumulated Dep. Buildings Accumulated Dep. Land Total Assets Swoop Feather ( ) Rate 9,723,375 3,500,000 10,956,250 16,042,000 (5,148,857) 31,967,000 (4,048,350) 4,500,000 67,491,418 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 5,435,000 21,500,000 26,935,000 0.5 0.5 Liabilites A/P Long-term NP Total Liabilites Stockholder's Equity Common Stock APIC Retained Earnings Cumulative Translation Adjustment Total Stockholders Equity 500,000 0.32 30,000,000 0.32 10,056,418 From I/S - From T.A. 40,556,418 Liabilities & Stockholder's Equity 67,491,418 Income Statement & Statement of Retained Earnings December 31, Year 3 USD ($) 4,861,688 1,750,000 5,478,125 8,021,000 (2,574,429) 15,983,500 (2,024,175) 2,250,000 33,745,709 Swoop Feather ( ) Sales COGS Depreciation Expense- Equipment Depreciation Expense- Building R&D Expense Other Expenses (Including Taxes) Net Income Plus Retained Earnings 1/1/Y3 Less Dividends Paid Retained Earnings 12/31/Y3 2,717,500 10,750,000 13,467,500 * This number comes from the in Computation of Translation Adjustment 160,000 9,600,000 4,119,735 6,398,474 20,278,209 Net Asset Balance 1/1/Y3 Change in Net Assets: Net Income, Y3 Dividends, 12/31/Y3 Net Asset Balance, 12/31/Y3 Net Asset Balance, 12/31/Y3 at current exchange rate 33,745,709 Cumulative Translation Adjustment 12/31/Y2 Translation Adjustment, Year 3 f Retained Earnings r3 Swoop Feather ( ) Rate USD ($) 33,000,000 (21,780,000) (2,291,714) (1,598,350) (1,350,000) (1,450,000) 4,529,936 0.466 0.466 0.466 0.466 0.466 0.466 15,378,000 (10,149,480) (1,067,939) (744,831) (629,100) (675,700) 2,110,950 6,526,482 (1,000,000) 10,056,418 * 0.5 2,508,785 (500,000) 4,119,735 * This number comes from the instructions on Scenario A. () Rate ($) 37,026,482 0.44 16,291,652 4,529,936 (1,000,000) 40,556,418 40,556,418 - 0.466 0.5 2,110,950 (500,000) 17,902,602 20,278,209 2,375,607 4,022,867 0.5 * 6,398,474 Balance Sheet December 31, Year 3 Assets Swoop Feather ( ) Cash A/R Inventory Equipment Accumulated Dep. Buildings Accumulated Dep. Land 1/1/Y1 Land 2/14/Y3 9,723,375 3,500,000 10,956,250 16,042,000 (5,148,857) 31,967,000 (4,048,350) 4,000,000 500,000 67,491,418 Total Assets Liabilites A/P Long-term NP 5,435,000 21,500,000 26,935,000 Total Liabilites Stockholder's Equity Common Stock APIC Retained Earnings 500,000 30,000,000 10,056,418 Total Stockholders Equity 40,556,418 Liabilities & Stockholder's Equity 67,491,418 Exhibit A: Cost of Goods Sold () Inventory 1/1/Y3 Plus Purchases Less Final Inventory COGS 5,478,125 27,258,125 (10,956,250) Rate 0.42 0.466 0.484 21,780,000 Exhibit B: Fixed Assets () Equipment 1/1/Y1 Equipment 3/1/Y3 10,000,000 6,042,000 Total Equipment 16,042,000 Rate 0.32 0.48 Buildings 1/1/Y1 Buildings 2/1/Y2 Buildings 2/14/Y3 23,000,000 3,000,000 5,967,000 Total Buildings 31,967,000 Exhibit C: Accumulated Depreciation () Equipment 1/1/Y1 Equipment 3/1/Y3 4,285,714 863,143 Total Equipment 5,148,857 Buildings 1/1/Y1 Buildings 2/1/Y2 Buildings 2/14/Y3 3,450,000 300,000 298,350 Total Buildings 4,048,350 0.32 0.39 0.475 Rate 0.32 0.48 0.32 0.39 0.475 Exhibit D: Depreciation Expense () Equipment 1/1/Y1 Equipment 3/1/Y3 1,428,571 863,143 Total Equipment 2,291,714 Buildings 1/1/Y1 Buildings 2/1/Y2 Buildings 2/14/Y3 1,150,000 150,000 298,350 Total Buildings 1,598,350 Rate 0.32 0.48 0.32 0.39 0.475 Income Statement & Statement of Retaine December 31, Year 3 Rate USD ($) 0.5 0.5 0.484 Ex. B Ex. C Ex. B Ex. C 0.32 0.475 4,861,688 1,750,000 5,302,825 6,100,160 (1,785,737) 11,364,325 (1,362,716) 1,280,000 237,500 27,748,044 Sales COGS Depreciation Expense- Equipment Depreciation Expense- Building R&D Expense Other Expenses (Including Taxes) Remeasurement Loss Net Income Plus Retained Earnings 1/1/Y3 Less Dividends Paid Retained Earnings 12/31/Y3 0.5 0.5 2,717,500 10,750,000 13,467,500 Exhibit E: Computation of Remeasureme 0.32 0.32 From I/S 160,000 9,600,000 3,617,472 13,377,472 26,844,972 ($) 2,300,813 12,702,286 (5,302,825) 9,700,274 ($) 3,200,000 2,900,160 6,100,160 Net Monetary Assets 1/1/Y3 Increase In Monetary Items: Sales, Y3 Decrease In Monetary Items: Purchases of Inventory, Y3 Research & Development Other Expenses Including Taxes Dividends Paid Purchase of Equipment 3/1/Y3 Purchase of Buildings 2/14/Y3 Purchase of Land 2/14/Y3 Net Monetary Liabilities 12/31/Y3 Net Monetary Liabilities 12/31/Y3, at current exchange rate Remeasurement Loss 7,360,000 1,170,000 2,834,325 11,364,325 ($) 1,371,429 414,309 1,785,737 1,104,000 117,000 141,716 1,362,716 ($) 457,143 414,309 871,451 368,000 58,500 141,716 568,216 & Statement of Retained Earnings cember 31, Year 3 Swoop Feather ( ) Rate USD ($) 33,000,000 (21,780,000) (2,291,714) (1,598,350) (1,350,000) (1,450,000) 4,529,936 0.466 Ex. A Ex. D Ex. D 0.466 0.466 15,378,000 (9,700,274) (871,451) (568,216) (629,100) (675,700) (1,274,234) 1,659,025 6,526,482 (1,000,000) 10,056,418 * 0.5 2,458,447 (500,000) 3,617,472 * This number comes from the instructions on Scenario B. utation of Remeasurement Gain 3, at current exchange rates () Rate ($) 24,278,750 0.44 10,682,650 33,000,000 0.466 15,378,000 (27,258,125) (1,350,000) (1,450,000) (1,000,000) (6,042,000) (5,967,000) (500,000) 13,711,625 13,711,625 0.466 0.466 0.466 0.5 0.48 0.475 0.475 (12,702,286) (629,100) (675,700) (500,000) (2,900,160) (2,834,325) (237,500) 5,581,579 6,855,813 0.5 $ (1,274,234) Balance Sheet December 31, Year 3 Assets Swoop Feather ( ) Rate Cash A/R Inventory Equipment Accumulated Dep. 9,723,375 3,500,000 10,956,250 16,042,000 (5,148,857) 0.5 0.5 0.484 Ex. B Ex. C Buildings Accumulated Dep. Land 1/1/Y1 Land 2/14/Y3 31,967,000 (4,048,350) 4,000,000 500,000 67,491,418 Ex. B Ex. C 0.32 0.475 5,435,000 5,435,000 0.5 0.5 12,000,000 40,000,000 10,056,418 0.32 0.32 From I/S Total Assets Liabilites A/P Long-term NP Total Liabilites Stockholder's Equity Common Stock APIC Retained Earnings Total Stockholders Equity 62,056,418 Liabilities & Stockholder's Equity 67,491,418 Exhibit A: Cost of Goods Sold () Inventory 1/1/Y3 Plus Purchases Less Final Inventory COGS Rate ($) 5,478,125 27,258,125 (10,956,250) 0.42 2,300,813 0.466 12,702,286 0.484 (5,302,825) 21,780,000 9,700,274 Exhibit B: Fixed Assets () Equipment 1/1/Y1 Equipment 3/1/Y3 10,000,000 6,042,000 Rate ($) 0.32 0.48 3,200,000 2,900,160 Total Equipment 16,042,000 Buildings 1/1/Y1 Buildings 2/1/Y2 Buildings 2/14/Y3 23,000,000 3,000,000 5,967,000 Total Buildings 31,967,000 Exhibit C: Accumulated Depreciation () Equipment 1/1/Y1 Equipment 3/1/Y3 4,285,714 863,143 Total Equipment 5,148,857 Buildings 1/1/Y1 Buildings 2/1/Y2 Buildings 2/14/Y3 3,450,000 300,000 298,350 Total Buildings 4,048,350 6,100,160 0.32 0.39 0.475 7,360,000 1,170,000 2,834,325 11,364,325 Rate ($) 0.32 0.48 1,371,429 414,309 1,785,737 0.32 0.39 0.475 1,104,000 117,000 141,716 1,362,716 Exhibit D: Depreciation Expense () Equipment 1/1/Y1 Equipment 3/1/Y3 1,428,571 863,143 Total Equipment 2,291,714 Buildings 1/1/Y1 Buildings 2/1/Y2 Buildings 2/14/Y3 1,150,000 150,000 298,350 Total Buildings 1,598,350 Rate ($) 0.32 0.48 457,143 414,309 871,451 0.32 0.39 0.475 368,000 58,500 141,716 568,216 Income Statement & Statement of Retained Ear December 31, Year 3 USD ($) 4,861,688 1,750,000 5,302,825 6,100,160 (1,785,737) 11,364,325 (1,362,716) 1,280,000 237,500 27,748,044 Sales COGS Depreciation Expense- Equipment Depreciation Expense- Building R&D Expense Other Expenses (Including Taxes) Remeasurement Gain Net Income Plus Retained Earnings 1/1/Y3 Less Dividends Paid Retained Earnings 12/31/Y3 2,717,500 2,717,500 3,840,000 12,800,000 8,305,746 24,945,746 27,663,246 Exhibit E: Computation of Remeasurement G Net Monetary Assets 1/1/Y3 Increase In Monetary Items: Sales, Y3 Decrease In Monetary Items: Purchases of Inventory, Y3 Research & Development Other Expenses Including Taxes Dividends Paid Purchase of Equipment 3/1/Y3 Purchase of Buildings 2/14/Y3 Purchase of Land 2/14/Y3 Net Monetary Liabilities 12/31/Y3 Net Monetary Liabilities 12/31/Y3, at current exchange rates Remeasurement Gain & Statement of Retained Earnings ember 31, Year 3 Swoop Feather ( ) Rate USD ($) 33,000,000 (21,780,000) (2,291,714) (1,598,350) (1,350,000) (1,450,000) 4,529,936 0.466 Ex. A Ex. D Ex. D 0.466 0.466 15,378,000 (9,700,274) (871,451) (568,216) (629,100) (675,700) 834,040 3,767,299 6,526,482 (1,000,000) 10,056,418 * 0.5 5,038,447 (500,000) 8,305,746 * This number comes from the instructions on Scenario C. tation of Remeasurement Gain t exchange rates () Rate ($) (19,001,250) 0.44 (8,360,550) 33,000,000 0.466 15,378,000 (5,478,125) (1,350,000) (1,450,000) (1,000,000) (6,042,000) (5,967,000) (500,000) (7,788,375) (7,788,375) 0.42 0.466 0.466 0.5 0.48 0.475 0.475 (2,300,813) (629,100) (675,700) (500,000) (2,900,160) (2,834,325) (237,500) (3,060,148) (3,894,188) 0.5 $ 834,040 918,838 Translation of Foreign Currency Financial Statements The following case is about translating the financial statements of a foreign subsidiary into the financial statements of the parent. This process is called \"consolidating financial statements\". You are the parent. Your parent company is \"The Utes\" and you also own a foreign (really, really foreign) company named UDC. You need to figure out how to get the financial statements of your foreign company (which are reported in a foreign currency) into the financial statements of your parent company (consolidation) which are reported in the U.S. Dollar ($). You will certainly want to use your book to help with this assignment. And, you will also want to pay close attention to the due date as well as the required documentation to be submitted. Lastly, I want to remind everyone that this is an INDIVIDUAL assignment. You are not to work as a group nor consult with classmates (current or former). You are not to go online and find a case that was submitted in a prior semester. If not clear enough, you are simply to do this 100% on your own. Academic dishonestly will result in failure of this course. Please take advantage of the class times set aside for working on this case and office hours. This case is a significant portion of your overall grade in this course. Good Luck! -Michael Lewis Inter-Galactic Domination of Cougars After annual battles between the Utes and Cougars and the eventual complete domination of the Cougars, the Utes decided it was time for a bigger challenge. The Utes decided to go for inter-galactic domination (over such alien life forms like the Trojans, Bruins, Ducks, etc...) and so the Utes decided to purchase another company (via a Foreign Direct Investment) on a distant planet (Planet Swoop) and begin operations on that planet (while still continuing to dominate their home turf of Planet Uinta and the Cougars). The name of the new business is UDC (Utes Dominate Cougars). On Planet Uinta (headquarters of the Utes) the form of currency that the Utes use as their reporting currency for their consolidated reporting financial statements is the U.S. Dollar ($); the Utes new operations on Planet Swoop uses Swoop Feathers ( ) for reporting currency on their financial statements. Because of differing reporting currencies between their two operations the Utes have to translate their foreign operating financial statements into the currency of U.S. Dollars so that they can submit their annual consolidated financial statements to the Securities and Exchange Commission. On January 1, Year 1 Utes acquired a 100% interest in UDC. The Utes are enjoying their new investment and it is time, once again, to consolidate and translate the financial statements from their Planet Swoop operations, UDC. The financial statements of UDC as of December 31, Year 3 are as follows: The January 1, Year 3, beginning inventory of 5,478,125 was purchased evenly throughout the last 6 months of Year 2. Purchases of inventory during Year 3 were acquired uniformly throughout year 3. The December 31, Year 3, ending inventory was acquired evenly throughout the last 6 months of Year 3. Inventory is held at cost. All fixed assets were purchased based on the following schedules: o A basket purchase of 27,000,000. This purchase was a building (#1) for 23,000,000 and Land for 4,000,000 on January 1, Year 1. o You built a second building for the price of 3,000,000 on February 1, Year 2. This is located on the same parcel of land as building #1. o basket purchase of 6,467,000. This purchase was a piece of land for 500,000 and a building (#3) for 5,967,000 on February 14, Year 3 o an equipment purchase of 10,000,000 on January 1, Year 1 o an equipment purchase of 6,042,000 on March 1, Year 3 The Utes have a corporate policy of depreciating Equipment on a straightline basis over 7 years. Buildings are depreciated on a straight-line basis over 20 years. The Utes corporate policy of depreciation also states that a full year's depreciation is taken in the year of acquisition. Dividends were declared and paid on December 31, Year 3. Required - you will submit all documentation (i.e. balance sheet and income statement for each scenario, all supporting schedules for each scenario--including the Calculation of Translation Adjustment, Calculation of Remeasurement Gain/Loss, and the accompanying inventory schedules and depreciation schedules). See Part 1 below. Along with the financial statements and supporting documentation that goes with each scenario, you are required to write an analysis for each scenario (part 2 below). Part 1. Translate UDC's financial statements into U.S. Dollars ($) in accordance with U.S. GAAP at December 31, Year 3. Each Scenario will require its own sets of financial statements translated into ($). Include all financial statements as well as all supporting documentation required to complete the financial statements. Scenario A: Assume the Swoop Feather ( )is the functional currency of UDC. The December 31, Year 2, retained earnings that appeared in Ute's translated financial statements were $2,508,785. The December 31, Year 2, cumulative translation adjustment that appeared in Ute's translated balance sheet was $4,022,867. Scenario B: Assume the U.S. Dollar is the functional currency of UDC (which is not UDC's reporting currency). The December 31, Year 2, retained earnings that appeared in Ute's re-measured financial statements were $2,458,447. Scenario C: Financials are the same as in Scenario B except UDC has no long-term debt on their balance sheet. Instead, UDC has common stock of 12,000,000 and additional paid-in capital of 40,000,000. The December 31, Year 2, retained earnings that appeared in Ute's re-measured financial statements were $5,038,447. Part 2. I want you to write your analysis as if you are speaking to Ute's executive team. In this scenario, The Utes executive team are your client and you are a financial consultant. Explain to your client (The executives at The Utes) which method they must use to translate UDC's financial statements and why. Explain why the sign of the translation adjustments in scenarios A, B, and C is positive or negative. Communicate to The Ute's what caused the company to be in the financial situation they are now in, what choices they could have made to mitigate any losses, etc. Consult with The Ute's on what they should consider in the future. Consult with The Ute's for each scenario individually so that they can read and understand what is happening in each set of financial statements. This analysis is 50% of your overall grade on the case. I would anticipate writing at least a full page for each scenario to fully communicate what has happened. Your project and analysis will be compared to your classmate's project and graded accordingly