The question is to translate Simbels 2009 financial statements into US dollars and prepare a consolidation worksheet for Cayce and its Egyptian subsidiary (Simbel Company).

Assume that the eqyptian pound is the subsidiary's functional currency.

Information:

On January 1, 2008, Cayce Corporation acquired 100 percent of Simbel Company for consideration paid of $126,000, which was equal to fair value. Cayce is a US based company headquartered in Buffalo, NY, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the cost method. Any excess of fair value over book value is attributable to undervalued land on Simbel's books. Simbel had no retained earnings at the date of acquisition. Following are the 2009 financial statements for the two operations. Information for Cayce is in US dollars and Simbel is in Eqyptian pounds.

2009 financials for Cayce: 2009 financials for Simbel:

Sales $200,000 Sales 800,000 lbs

Cost of Goods Sold ($93,800) Cost of Goods Sold (420,000) lbs

Salary Expense ($19,000) Salary Expense (74,000) lbs

Rent Expense ($7,000) Rent Expense (46,000) lbs

Other Expenses ($21,000) Other Expenses (59,000) lbs

Dividend Income from Simbel $13,750

Gain on sale fixed asset 10/1/09 $0 GOS fixed asset 10/1/09 -30,000 lbs

Net Income $72,950 Net Income 231,000 lbs

Ret. Earnings 1/1/09 $318,000 Ret. Earnings 1/1/09 133,000 lbs

Net Income $72,950 Net income 231,000 lbs

Dividends Paid ($24,000) Dividends Paid (50,000) lbs

Ret. Earnings 12/31/09 $366,950 Ret. Earnings 12/31/09 314,000 lbs

Cash and Receivables $110,750 Cash and Rec. 146,000 lbs

Inventory $98,000 Inventory 297,000 lbs

Prepaid Expenses $30,000 Prepaid expenses 0 lbs

Investment in Simbel (cost) $126,000 Fixed Assets 455,000 lbs

Fixed Assets (net) $762,750 Accounts Payable 54,000 lbs

Accounts Payable $60,800 Notes Pay. due in 2011 140,000 lbs

Notes Pay. due in 2011 $132,000 Common Stock 240,000 lbs

Common Stock $120,000 Additional pd in capital 150,000 lbs

Additional pd in capital $83,000 Ret.Earnings 12/31/09 314,000 lbs

Ret. Earnings 12/31/09 $366,950 Total Liab. and equities 898,000 lbs

Total Liabilities and equities $762,750

Here is some additional information: During 2008 the first year of joint operation, Simbel reported income of 163,000 lbs earned evenly throughout the year. Simbel paid a dividend of 30,000 lbs to Cayce on June 1 of that year. Simbel also paid the 2009 dividend on June 1. On December 9, 2009, Simbel classified a 10,000 lbs expenditure as rent expense, although this payment related to prepayment of rent for the first few months of 2010.

The exchange rates for 1 lb are as follows:

January 1, 2008 $.300

June 1, 2008 $.290

Weighted average rate for 2008 $.288

December 31, 2008 $.280

June 1, 2009 $.275

October 1, 2009 $.273

Weighted Average rate for 2009 $.274

December 31, 2009 $.270

This is the way the problem is written. This is my second time sending this in.