On January 1, 2017, a U.S. company purchased 100% of the outstanding stock of Ventana Grains, a company located in Latz City, New Zealand. Ventana Grains was organized on January 1, 2003. All the property, plant, and equipment held on January 1, 2017, was acquired when the company was organized. The business combination was accounted for as a purchase transaction. The 2017 financial statements for Ventana Grains, prepared in its local currency, the New Zealand dollar, are given here.

VENTANA GRAINS

Comparative Balance Sheets

January 1 and December 31, 2017

Jan. 1

Dec. 31

Cash and Receivables

500,000

880,000

Inventories

600,000

500,000

Land

400,000

400,000

Buildings (net)

650,000

605,000

Equipment (net)

465,000

470,000

Totals Assets

2,615,000

2,855,000

Jan. 1

Dec. 31

Short-Term Accounts and Notes

295,000

210,000

Long-Term Notes (600,000 issued 9/1/2013,

80,000 issued 7/1/2017)

600,000

680,000

Common Stock

800,000

800,000

Additional Paid-in Capital

200,000

200,000

Retained Earnings

720,000

965,000

Total Liabilities and Equity

2,615,000

2,855,000

VENTANA GRAINS

Consolidated Income and Retained Earnings Statement

for the Year Ended December 31, 2017

Revenues

3,225,000

Cost of Goods Sold:

Beginning Inventory

600,000

Purchases

2,100,000

Goods Available for Sale

2,700,000

Less: Ending Inventory

500,000

Cost of Goods Sold

2,200,000

Gross Profit on Sales

1,025,000

Depreciation Expense

140,000

Other Expenses

540,000

680,000

Net Income

345,000

Jan. 1 Retained Earnings

720,000

Total

1,065,000

Less: Dividends Paid

100,000

Dec. 31 Retained Earnings

965,000

The account balances are computed in conformity with U.S. generally accepted accounting standards.

Other information is as follows:

1. Direct exchange rates for the New Zealand dollar on various dates were:

Date

Exchange Rate

1-Jan-2003

$0.8011

1-Sep-2013

0.5813

1-Jan-2017

0.7924

1-Jul-2017

0.7412

31-Dec-2017

0.7298

Average for 2017

0.7480

Average for the last four months of 2017

0.7476

2. Ventana Grains purchased additional equipment for 100,000 New Zealand dollars on July 1, 2017, by issuing a note for 80,000 New Zealand dollars and paying the balance in cash.

3. Sales were made and purchases and "Other Expenses" were incurred evenly throughout the year.

4. Depreciation for the period in New Zealand dollars was computed as follows:

Building

45,000

Equipment - Purchased before 1/1/2017

85,000

Equipment - Purchased July 1, 2017

10,000

5. The inventory, purchased evenly throughout the year, is valued on a FIFO basis. The beginning inventory was acquired when the exchange rate was $.6780. The ending inventory was acquired during the last four months of 2017.

6. Dividends of 50,000 New Zealand dollars were declared and paid on July 1 and December 31.

Instructions: Translate the financial statements into dollars assuming that the U.S. dollar is the functional currency.