Question
Pepper Corporation purchased 90% of the common stock of Salt Company on January 1, 2013 . The cost of the investment was equal to the
Pepper Corporation purchased 90% of the common stock of Salt Company on January 1, 2013. The cost of the investment was equal to the book value interest acquired. Salt Company operates two retail stores and an exporting business in London that specializes in buying and selling British clothes. Salt Company was incorporated on January 1, 2011, at which time all the property, plant, and equipment were purchased. The longterm notes were issued to partially finance the purchase of the fixed assets.
Direct exchange rates for the British pound are as follows:
January 1, 2011 | $1.8996 |
January 1, 2013 | 1.8365 |
Average for the last quarter of 2018 | 1.5300 |
January 1, 2019 | 1.4919 |
December 31, 2019 | 1.4730 |
Average for 2019 | 1.4788 |
Average for AugustDecember 2019 | 1.4950 |
Dividends were declared and paid on December 31, 2019. The January 1, 2019, retained earnings balance of Salt in dollars was $1,593,408, and the cumulative translation adjustment was a debit balance of $939,898. The beginning inventory of 420,000 was acquired during the last quarter of 2018 and the ending inventory was acquired during the last five months of 2019. Sales were made and purchases and other expenses were incurred evenly during the year. Dividends were declared on 12/31/2019
Remeasure the December 31, 2019, account balances of Salt Company into dollars assuming that the US dollar is the functional currency of Salt Company. The beginning retained earnings balance of Salt Company in dollars was $1,791,324.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started