P12-18 a.
Translation, Journal Entries, Consolidated Comprehensive Income, and Stockholders' Equity On January 1, 20X5, Taft Company acquired all of the outstanding stock of Vikix, Inc.,a Norwe. gian company, at a cost of $151,200. Vikix's net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiary's identifi able assets and liabilities approximated their fair values excopt for property, plant, an and patents acquired. The fair value of Vikix's property, plant, and equipment exceeded its value by $18,000. The remaining useful life of Vikix's equipment at January 1, 20X5 was 10 years P12-17 d equipment Chapter 12 Malinsional Accotanaing: Isues in Financial Reporting ard Trsmistion of Forrign Entity Saturmenis 623 The remainder of the differential was attributable to a patent having an estimated useful life of 5 years. Vikix's trial balance on December 31, 20XS, in kroser, follows: Debits Credits Cash Accounts Receivable (net) Inventory Property, Plant, and Equipment Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid NKr 150,000 200,000 270,000 NKr 150,000 90,000 190,000 450,000 250,000 690,000 410,000 100,000 50,000 40,000 NKr1,820,000 NKr1,820,000 Additional Information 1. Vikix uses the FIFO method for its inventory. The beginning inventory was acquired on December 31, 20X4, and ending inventory was acquired on December 15, 20X5. Purchases 2. Vikix acquired all of its property, plant, and equipment on July 1, 20X3, and uses straight-line 3. Vikix's sales were i ty throughout 20X5, and its operating expenses were incurred 4. The dividends were der.id avd paid on July 1,20X5. of NKr420,000 were made evenly throughout 20X3 depreciation. evenly throughoi 2 5. Taft's income frorm its cnn aperations was $275,000 for 20X5, and its total stockholders' equity on January 1, 20x3, was $3,500,000. Taft declared $100,000 of dividends during 20X3. 6. Exchange rates were as follows July 1, 20X3 December 30, 20x4 January 1, 20x5 July 1, 20X5 December 15, 20x5 December 31, 20x5 Average for 20X5 NKr1 $.18 NKr1 $.19 NKri $.205 NKr1 $.21 NKr1 $.20 Required a. Prepare a schedule translating the trial balance from Norwegian kroner into U.s. dollars Assume the kroner is the functional currency Assume that Taft uses the basic equity method. Record vestment in the Norwegian subsidiary during 20XS. Provide support for the amounts in the journal entries, including a schedule of the translation adjustment related to the differential. all journal entries that relate to its in- the necessary documentation and b e. Prepare a schedule that determines Taft's consolidated comprehensive income for 20X5 d. Compute Taft's total consolidated stockholders' equity at December 31, 20xs Remeasurement, Journal Entries, Consolidated Net Income, and Stockholders' Equity Refer to the information in Problem P12-17. Assume the U.S. dollar is the functional curre 2-18 624 Chapter 12 Multinational Accoumting: Isses in Financial Reporting and Translationoty utity Statements Required a. Prepare a schedule remeasuring the trial balance from Norwegian kroner into US. dollars
