Translation of financial Statements and consolidation of a foreign subsidiari (no amortization ofAAP)
Assume that your company owns a subsidiary operating in Great Britain. The subsidiary maintains its books in the British pound as its
functional currency. Following are the subsidiary's financial statements for the most recent years.
INCOME STATEMENT	.	BALANCE SHEET	..	STATEMENT OF CASH FLOWS	..2
SALES	2,100,000	ASSETS	597,660	STATEMENT OF CASH FLOWS
COST OF GOODS SOLD	- 1,260,000	CASH	487,200	NET INCOME	294,000
GROSS PROFIT	840,000	ACCOUNTS RECEIVABLE	625,800	CHANGE IN ACCOUNT REC.	- 81,200
OPEARATING EXPENSES	- 546,000	INVENTORY	625,800	CHANGE IN INVENTORIES	- 104,300
NET INCOME	294,000	PPE	1,157,520	CHANGE IN CURRENT LIAB.	59,360
		TOTAL ASSETS	2,868,180	NET CASH FROM OPERAT. ACT.	167,860
STATEMENT OF R. E.
BOY RET. EARNING	1,102,500	LIABILITIES AND STOCK E	356,160	CHANGE IN PPE, NET	- 107,520
NET INCOME	294,000	LONG-TERM LIABILITIES	829,920	NET CASH FROM INVEST. ACT.	- 107,520
DIVIDENDS	- 29,400			CHANGE IN LONG-TERM DEBT	138,320
EOY RET. EARNINGS	1,367,100	COMMON STOCK	140,000	DIVIDENDS	- 29,400
		APIC	175,000	NET CASH FROM FINAN. ACT.	108,920
		RETAINED EARNINGS	1,367,100
		TOTAL LIABILITIES AND E	2,868,180	NET CHANGE IN CASH	169,260
				BEGINNING CASH	428,400
				ENDING CASH	597,660
THE RELEVANT EXCHANGE RATES FOR THE $US VALUE OF THE BRITISH POUND ARE AS FOLLOWS:
BOY RATE			$1.90
OEY RATE			$2.00
AVG. RATE			$1.95
PPE PURCHASE DATE RATE			$1.96
LTD BORROWING DATE RATE			$1.97
DIVIDEND RATE			$1.98
HISTORICAL RATE (COMMON STOCK AND APIC)			$1.98
A) TRANSLATE THE SUBSIDIARY'S INCOME STATEMENT, STATEMENT OF RETAINED EARNINGS, BALANCE SHEET AND STATEMENT OF CASH
FLOWS FROM BRITISH POUND INTO $US (ASSUME THAT THE BOY RETAINED EARNINGS FROM THE SUBSIDIARY IS $1,950,690).
B) COMPUTE THE ENDING CUMULATIVE TRANSLATION ADJUSTMENT DIRECTLY, ASSUMING A BOY BALANCE OF $207,060. WHAT
JOURNAL ENTRY DID THE PARENT COMPANY MAKE AS A RESULT OF THIS COMPUTATION?
						PLEASE ANSWER A & B. THANK YOU.