P$7\mathrm{.}12$ Consolidated Financial Statements, Translated Subsidiary On January $1,2023,$ the Phillips Company acquired all of the outstanding shares of Standard, Ltd$.,$ a U$.$K$.$ firm, for $8,000,000$ in cash. At the end of $2023,$ the two companies presented the condensed trial balances below. Phillips' entry to update the investment for $2023$ equity in net income

and its share of Standard's translation gain:

Step $3$: Consolidation working paper entries

Ref. Description

Debit

Credit

$($C$)$ Income from subsidiary

Equity in OCL of Standard

To reverse equity method entries for $2023.$

$($E$)$

To eliminate Standard's stockholders' equity as of January $1.$

$($R$)$

End of year rates

Other comprehensive loss

Enter amount of Cost over BV from J$51$

To record the beginning$-$of$-$year revaluations.

At date of acquisition, the exchange rate was $$\frac{1\mathrm{.}45}{}.$ Standard's inventory and buildings were undervalued by $100,000$ and $500,000,$ respectively. All of the undervalued inventory was sold during the year, and the buildings are depreciated over a $10-$year life, straight$-$line. Other relevant information is as follows:

The exchange rate at the end of $2023$ was $$\frac{1\mathrm{.}40}{}.$ The average exchange rate for $2023$ was $$\frac{1\mathrm{.}42}{}.$