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Problem 5. On January 1, 2017, a U.S. company purchased 100% of the outstanding stock of Ventana Grains, a company ity, New Zealand. Ventana Grains

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Problem 5. On January 1, 2017, a U.S. company purchased 100% of the outstanding stock of Ventana Grains, a company ity, New Zealand. Ventana Grains was organized on January 1, 2003. All the property, plant, and equipment held on January 1, 2017, was acquired when the company was organized. The business combination was accounted for as a purchase transaction. The 2017 financial statements for Ventana Grains, prepared in its local currency, the New Zealand dollar, are given here. VENTANA GRAINS Comparative Balance Sheets January 1 and December 31, 2017 Jan. 1 Dec. 31 Cash and Receivables 500,000 880,000 Inventories 600.000 500.000 Land 400,000 400,000 Buildings (net) 650,000 605,000 Equipment (net) 465,000 470.000 Totals Assets 1sted on 2,615,000 2,855,000 Jan. 1 Dec. 31 Short-Term Accounts and Notes 295.000 210.000 Long-Term Notes (600,000 issued 9/1/2013, 80,000 issued 7/1/2017) 600,000 680,000 Common Stock 800,000 800,000 Additional Paid-in Capital 200,000 200,000 Retained Earnings 720,000 965,000 Total Liabilities and Equity 2,615,000 2,855,000 VENTANA GRAINS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2017 Revenues 3,225,000 Cost of Goods Sold Beginning Inventory 600,000 Purchases 2,100,000 Goods Available for Sale 2,700,000 Less: Ending Inventory 500,000 Cost of Goods Sold 2,200,000 Gross Profit on Sales 1,025,000 Depreciation Expense 140,000 540,000 Other Expenses Net Income Jan. 1 Retained Earnings Total Less: Dividends Paid Dec. 31 Retained Earnings 680,000 345,000 720,000 1,065,000 100,000 965,000 The account balances are computed in conformity with U.S. generally accepted accounting standards, Other information is as follows: 1. Direct exchange rates for the New Zealand dollar on various dates were: Date Exchange Rate 1-Jan-2003 $0.8011 1-Sep-2013 0.5813 1-Jan-2017 0.7924 1-Jul-2017 0.7412 31-Dec-2017 0.7298 Average for 2017 0.7480 Average for the last four months of 2017 0.7476 2. Ventana Grains purchased additional equipment for 100,000 New Zealand dollars on July 1, 2017, by issuing a note for 80,000 New Zealand dollars and paying the balance in cash. 3. Sales were made and purchases and "Other Expenses" were incurred evenly throughout the year. 4. Depreciation for the period in New Zealand dollars was computed as follows: Building 45,000 Equipment - Purchased before 1/1/2017 85,000 Equipment - Purchased July 1, 2017 10,000 5. The inventory, purchased evenly throughout the year, is valued on a FIFO basis. The beginning inventory was acquired when the exchange rate was $.6780. The ending inventory was acquired during the last four months of 2017. 6. Dividends of 50,000 New Zealand dollars were declared and paid on July 1 and December 31. Instructions: Translate the financial statements into dollars assuming that the U.S. dollar is the functional currency

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