Problem 11-9 (LO 5, 6) Same facts as Problem 11-8 except involve remeasure- ment. Useful comparison with Problem 11-8. Assume the same facts as Problem 11-8 with the following exceptions:
Problem 11-8 (LO3 5) Translate a trial balance and prepare a consolidation work- sheet. Useful comparison with Problem 11-9, Balfour Corporation acquired 100% of Tobac, Inc., a foreign corporation, for 33,000,000 FCThe acquisition, which was accounted for as a purchase, occurred on July 1, 2015, when Tobac's equity, in FC, was as follows: Common stock Paidin copital in excess of par 19,000,000 FC 8,480,000 2,520,000 Any excess of cost over book value is traceable to equipment which is to be depreciated over 10 vears. Balfour uses the samnle eaurv method to account for its investment in Toha On April 1, 2017, Tobac acquired additional equipment costing 4,000,000 FC. Equipment is depreciated by the straight-line method over 10 years. No other equipment had been acquired or disposed of since 2014. Tobac December 31, 2017, consists of the the LIFO inventory method. Ending inventory on Acquired in the first quarter of 2014.... Acquired in the first quarter of 2015. 1,000,000FC 500,000 The cost of sales is traceable to goods purchased during 2017 as follows: Acquired uniformly over the last 9 months. Acquired in the first quorter... 23,400,0O0 FC 4,200,000 Other expenses were incurred evenly over the year On April 1, 2017, Tobac borrowed $1,280,000 from the parent company in order to help finance the purchase of equipment. The note is due in one year and bears interest at a rate of 896, Principal and interest amounts are due to the parent in dollars. Various spot rates are as follows First quarter, 2014 average $046 December 31, 2016 $0.60 0.62 0.64 0.67 0.66 First quarter, 2015 average..0.53 2017 Averoge July 1,2015 0.55 Last 9 months, 2017 averoge 0.57 0.58 2016 Averoge. The December 31. 2017, trial balances for Tobac and Balfour are as follows Tobac, Inc. Cash ...*....*.*...*.. 4,463,200 3,087,385 FC Inventory Due from Toboc 16,300,000 8,000,000 1,356,800 23,712,363 (12,300,000! (2,087,385) (42,000,000, .. Due to Balfour Other Liabillities Common Stock (35,000,000) (19,000,000! (2,000,000, (8,480,000 4,500,0 (7,520,000 _..(98,000,000) 40,000,000 64,000,000 27,600,000 8,076,800 3,300,000 Cost of Sales Depreciation Expense Interest Expense on Balfowr Loan (accrued on December 31, 2017) See Nole B Exchange Gain on Balfour loan-See Note B 118,154 30,769) nterest Income. 76,800) Totals O FC
