On January 1, 2016, Cayce Corporation acquired 100 percent of Simbel Company for consideration transferred with a fair value of $145,800. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the initial value method. Any excess of fair value of consideration transferred over book value is attributable to undervalued land on Simbel's books. Simbel had no retained earnings at the date of acquisition. Following are the 2017 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars ($) and Egyptian pounds (SE) respectively Simbel Cayce Corporation Company EE 905,900 Sales Cost of goods sold Salary expense Rent expense Other expenses Dividend income-from Simbel Gain on sale of building, 10/1/17 $ 236,800 (475,300) (83,200) (112,200) (23,600) (9,300) (27,900) 20,075 (50,600) (65,900) 53,000 Net income $ 83,875 EE 283,900 Retained earnings, 1/1/17 Net income Dividends EE 151,400 283,900 (47,000) OBP0 341,000 83,875 73,000 EE 362, 300 $ 377,875 Retained earnings, 12/31/17 Cash and receivables Inventory Prepaid expenses Investment in Simbel (initial value) Property, plant & equipment (net) $ 113,100 100,300 30,000 145,800 471,600 $ 860,800 $ 70,000 EE 171,300 347,600 478,000 EE 996,900 EE 60,900 Total assets Accounts payable prty, piant&equipment nety Total assets Accounts payable Notes payable-due in 2020 Common stock Additional paid-in capital Retained earnings, 12/31/17 860,800 $ 70,000 170,825 143,000 99,100 377,875 860,800 EE 996,900 EE 60,900 146,900 263,000 163,800 362,300 EE 996,900 Total liabilities and equities Additional Information . During 2016, the first year of joint operation, Simbel reported income of E 186,000 earned evenly throughout the year. Simbel declared a dividend of SE 34,600 to Cayce on June 1 of that year. Simbel also declared the 2017 dividend on June 1. .On December 9, 2017, Simbel classified a EE 12,300 expenditure as a rent expense, although this payment related to prepayment of rent for the first few months of 2018 . The exchange rates for 1 SE are as follows January 1, 2016 June 1, 2016 Weighted average rate for 2016 December 31, 2017 June 1, 2017 October 1, 2017 Weighted average rate for 2017 December 31, 2017 0.300 0.290 0.288 0.280 0.275 0.273 0.274 0.270 Translate Simbel's 2017 financial statements into U.S. dollars and prepare a consolidation worksheet for Cayce and its Egyptian subsidiary. Assume that the Egyptian pound is the subsidiary's functional currency Consolidation Worksheet Adjustments and Balances Cayce Dollars Credit Dollars Dollars Sales Cost of goods sold Salary expense Rent expense Other expenses Dividend income Gain on sale of fixed asset, 10/1/17 Net income Retained Net income 20,075 eanings, 1/1/17 Retained Cash and receivables earnings, 12/31/17 46,251 150,351 00,300 30,000 145,800 471.600 880,800 93.852 194,152 Prepaid rent Investment Property, plant & equipment Total assets 129,060 269.163 53.503 payable Notes payable Common stock Additional paid-in capital Retained eanings, 1 translation adjustment (negative) Total liabties and equities 20,075
