Question No: 1

The Pearce Corporation, a US corporation, formed a British subsidiary on January 1, 2017 by investing 550,000 in exchange for all of the subsidiarys no-par common stock. The British subsidiary, Seakam Corporation, purchased real property on April 1, 2017 at a cost of 500,000, with 100,000 allocated to land and 400,000 allocated to the building. The building is depreciated over a 40-year estimated useful life on a straight-line basis with no salvage value. The US dollar is Seakams functional currency, but it keeps its records in pounds. The British economy does not experience high rates of inflation. Exchange rates for the pound on various dates are:

January 01, 2017= 1 = $1.40

April 01, 2017 = 1 = $1.42

December 31, 2017 = 1 = $1.45

20X7 average rate = 1 = $1.44

Seakam's adjusted trial balance is presented below for the year ended December 31, 2017.

Debits:
Cash			200,000
Accounts receivable			72,000
Notes receivable			99,000
Building			400,000
Land			100,000
Depreciation expense			7,500
Other expenses			115,000
Salary expense			208,000
Total debits			1,201,500

Credits
Accumulated depreciation			7,500
Accounts payable			100,000
Common stock			550,000
Retained earnings			0
Equity adjustment			0
Sales revenue			544,000
Total credits			1,201,500

Required: Prepare under temporal method Seakam's:

1. Translation working papers;
2. Translated income statement; and
3. Translated balance sheet.