On January 1, 2019, Cayce Corporation acquired 100 percent of Simbel Company for consideration transferred with a fair value of $127,800. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the initial value method. Any excess of fair value of consideration transferred over book value is attributable to undervalued land on Simbel's books. Simbel had no retained earnings at the date of acquisition. The following are the 2020 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars ($) and Egyptian pounds (EE), respectively. Cayce Corporation $ 204,800 (96,200) (19,600) (7,300) (21,900) 14,575 0 Sales Cost of goods sold Salary expense Rent expense Other expenses Dividend income from Simbel Gain on sale of building, 10/1/20 Net income Retained earnings, 1/1/20 Net income Dividends Retained earnings, 12/31/20 Cash and receivables Inventory Prepaid expenses Investment in Simbel (initial value) Property, plant, and equipment (net) Total assets Accounts payable Notes payable-due in 2023 Common stock Additional paid-in capital Retained earnings, 12/31/20 Total liabilities and equities $ 74,375 $ 321,000 74,375 (27,000) $ 368, 375 $ 111,100 98,300 30,000 127,800 407,600 $ 774,800 $ 62,000 136,325 123,000 85,100 368,375 $ 774,800 Simbel Company E 813,900 (427,300) (75, 200) (46,600) (59,900) 0 33,000 E 237,900 E 135,400 237,900 (53,000) E 320, 300 E 149,300 303,600 0 0 458,000 E 910,900 54,900 140,900 243,000 151,800 320, 300 E 910, 900 Additional Information . . During 2019, the first year of joint operation, Simbel reported income of E 166,000 earned evenly throughout the year. Simbel declared a dividend of E 30,600 to Cayce on June 1 of that year. Simbel also declared the 2020 dividend on June 1. On December 9, 2020, Simbel classified a E 10,300 expenditure as a rent expense, although this payment related to prepayment of rent for the first few months of 2021. The exchange rates for 1 E are as follows: . January 1, 2019 June 1, 2019 Weighted average rate for 2019 December 31, 2019 June 1, 2020 October 1, 2020 Weighted average rate for 2020 December 31, 2020 $ 0.300 0.290 0.288 0.280 0.275 0.273 0.274 0.270 Translate Simbel's 2020 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. CAYCE CORPORATION TRANSLATION WORKSHEET Account Egyptian Pounds Exchange U.S. Dollars Rate Sales Cost of goods sold Salary expense Rent expense (adjusted) Other expenses Gain on sale of building, 10/1/20 Net income 0 Retained earnings, 1/1/20 Net income Dividends Retained earnings, 12/31/20 0 0 Cash and receivables Inventory Prepaid expenses (adjusted) Property, plant, and equipment (net) Total assets 0 0 Accounts payable Notes payable-due in 2023 Common stock Additional paid-in capital Retained earnings, 12/31/20 AUUitonai pald-in capital Retained earnings, 12/31/20 Subtotal 0 0 Cumulative translation adjustment Total liabilities and equities 0 0 Translation Worksheet Consolidation Worksheet CAYCE CORPORATION Consolidation Worksheet Consolidation Entries Consolidated Balances Account Cayce Dollars Simbel Dollars Debit Credit Dollars Sales Cost of goods sold Salary expense Rent expense Other expenses Dividend incomefrom Simbel Gain on sale of building, 10/1/20 Net income 0 0 0 Retained earnings, 1/1/20 Net income Dividends 0 0 0 Retained earnings, 12/31/20 Cash and receivables Inventory Prepaid expenses Investment in Simbel (initial value) Property, plant, and equipment (net) Total assets Accounts payable Notes payabledue in 2023 0 0 0 Prepaid expenses Investment in Simbel (initial value) Property, plant, and equipment (net) Total assets 0 0 0 Accounts payable Notes payabledue in 2023 Common stock Additional paid-in capital Retained earnings, 12/31/20 Subtotal Cumulative translation adjustment Total liabilities and equities 0 0 0 0 0 0 0 0
