Translation of financial statements and consolidation of a foreign subsidiary (amortization of AAP) Assume that your company owns a subsidiary operating in Brazil. The subsidiary maintains its books in the Brazilian real (BRL) as its functional currency. The relevant exchange rates for the $US value of the Brazilian real (BRL) are as follows: $0.21 $0.28 $0.24 $0.25 $0.25 Dividend rate $0.26 Historical rate (common stock and APIC) $0.09 BOY rate EOY rate Avg. rate PPE purchase date rate LTD borrowing date rate Round answers to the nearest dollar. Use rounded answers for subsequent calculations. Use negative signs with answers that are reductions (COGS, expenses, dividends, cash outflows, losses, etc.). a. Translate the subsidiary's income statement, statement of retained earnings, balance sheet, and statement of cash flows into $US (assume that the BOY Retained Earnings is $396,900). Use a negative sign with your answers in the "Subsidiary (in $)" column if corresponding figure in the "Subs

d. Using your transiated subsidiary financial statements from Part a and the parent's financial data provided in Part c, prepare the consolidation spreadsheet for the year. c. Following are selected balance sheet accounts for the parent: Translation of financial statements and consolidation of a foreign iubsidiary (amortization of AAP) Round anvwers to the seares dellar, Ure reunded answers for subsequent catcutatians. and Changes in accoounts in the Solement or cash Plown: b. Compute the ending Cumulatwe Iransiation Adjustrient direcly, assuming a BOY bulance of 5141,750 . What journal entry did the parent compary make as a resulr of this computation? \begin{tabular}{|c|c|c|c|} \hline & \multicolumn{3}{|c|}{ Change in } \\ \hline & (in aru) & rate & (ins) \\ \hline bor Net assets & & 5 & 3 \\ \hline Netincome & & 1 & \\ \hline Oividents & & s & \\ \hline Trambion abiutument for the yed & & & 3 \\ \hline Bor Cumulative Transiation Adjustiment & & T= & \\ \hline Lor Cumulative Tramlution Adjustment & & & 5 \\ \hline \multicolumn{4}{|c|}{ General Journal } \\ \hline Description. & De: & & \\ \hline & \multicolumn{3}{|l|}{} \\ \hline & \\ \hline To record transation adfustment for the & ear:- & & \\ \hline \end{tabular} Check Uie a negative sign with answers thut reduce the eguify incitrumt batance: 2. Cempute the equity incoine of 5195,120 ieported by the parent in its income statement. Use a negative sign with your antwer, if it reduces the income. \begin{tabular}{|c|c|c|c|} \hline & \begin{tabular}{l} Subsidiary \\ (in BRL) \end{tabular} & \begin{tabular}{c} Translation \\ Rate \end{tabular} & \begin{tabular}{c} Subsidiary \\ (in \$) \end{tabular} \\ \hline \multicolumn{4}{|l|}{ Income statement } \\ \hline Sales & 4,200,000 & $ & $ \\ \hline Cost of goods sold & (2,520,000) & $ & \\ \hline Gross profit & 1,680,000 & & \\ \hline Operating expenses & (1,092,000) & $ & \\ \hline Net income & 588,000 & & $ \\ \hline \multicolumn{4}{|l|}{ Statement of retained earnings } \\ \hline BOY retained earnings & 2,205,000 & & $396,900 \\ \hline Net income & 588,000 & & \\ \hline Dividends & (58,800) & $ & \\ \hline Ending retained earnings & 2,734,200 & & $ \\ \hline \multicolumn{4}{|l|}{ Balance sheet } \\ \hline Assets & & & \\ \hline Cash & 1,195,320 & $ & $ \\ \hline Accounts receivable & 974,400 & $ & \\ \hline Inventory & 1,251,600 & $ & \\ \hline \multirow[t]{2}{*}{ Property, plant, and equipment, net } & 2,315,040 & $ & \\ \hline & 5,736,360 & & $ \\ \hline Liabilities and stockholders' equity & & & \\ \hline Current liabilities & 712,320 & $ & $ \\ \hline Long-term liabilities & 1,659,840 & $ & \\ \hline Common stock & 280,000 & $ & \\ \hline APIC & 350,000 & $ & \\ \hline Retained earnings & 2,734,200 & & \\ \hline \multicolumn{4}{|l|}{ Cumulative translation adjustment } \\ \hline & 5,736,360 & & $ \\ \hline \end{tabular} d. Using your transiated subsidiary financial statements from Part a and the parent's financial data provided in Part c, prepare the consolidation spreadsheet for the year. c. Following are selected balance sheet accounts for the parent: Translation of financial statements and consolidation of a foreign iubsidiary (amortization of AAP) Round anvwers to the seares dellar, Ure reunded answers for subsequent catcutatians. and Changes in accoounts in the Solement or cash Plown: b. Compute the ending Cumulatwe Iransiation Adjustrient direcly, assuming a BOY bulance of 5141,750 . What journal entry did the parent compary make as a resulr of this computation? \begin{tabular}{|c|c|c|c|} \hline & \multicolumn{3}{|c|}{ Change in } \\ \hline & (in aru) & rate & (ins) \\ \hline bor Net assets & & 5 & 3 \\ \hline Netincome & & 1 & \\ \hline Oividents & & s & \\ \hline Trambion abiutument for the yed & & & 3 \\ \hline Bor Cumulative Transiation Adjustiment & & T= & \\ \hline Lor Cumulative Tramlution Adjustment & & & 5 \\ \hline \multicolumn{4}{|c|}{ General Journal } \\ \hline Description. & De: & & \\ \hline & \multicolumn{3}{|l|}{} \\ \hline & \\ \hline To record transation adfustment for the & ear:- & & \\ \hline \end{tabular} Check Uie a negative sign with answers thut reduce the eguify incitrumt batance: 2. Cempute the equity incoine of 5195,120 ieported by the parent in its income statement. Use a negative sign with your antwer, if it reduces the income. \begin{tabular}{|c|c|c|c|} \hline & \begin{tabular}{l} Subsidiary \\ (in BRL) \end{tabular} & \begin{tabular}{c} Translation \\ Rate \end{tabular} & \begin{tabular}{c} Subsidiary \\ (in \$) \end{tabular} \\ \hline \multicolumn{4}{|l|}{ Income statement } \\ \hline Sales & 4,200,000 & $ & $ \\ \hline Cost of goods sold & (2,520,000) & $ & \\ \hline Gross profit & 1,680,000 & & \\ \hline Operating expenses & (1,092,000) & $ & \\ \hline Net income & 588,000 & & $ \\ \hline \multicolumn{4}{|l|}{ Statement of retained earnings } \\ \hline BOY retained earnings & 2,205,000 & & $396,900 \\ \hline Net income & 588,000 & & \\ \hline Dividends & (58,800) & $ & \\ \hline Ending retained earnings & 2,734,200 & & $ \\ \hline \multicolumn{4}{|l|}{ Balance sheet } \\ \hline Assets & & & \\ \hline Cash & 1,195,320 & $ & $ \\ \hline Accounts receivable & 974,400 & $ & \\ \hline Inventory & 1,251,600 & $ & \\ \hline \multirow[t]{2}{*}{ Property, plant, and equipment, net } & 2,315,040 & $ & \\ \hline & 5,736,360 & & $ \\ \hline Liabilities and stockholders' equity & & & \\ \hline Current liabilities & 712,320 & $ & $ \\ \hline Long-term liabilities & 1,659,840 & $ & \\ \hline Common stock & 280,000 & $ & \\ \hline APIC & 350,000 & $ & \\ \hline Retained earnings & 2,734,200 & & \\ \hline \multicolumn{4}{|l|}{ Cumulative translation adjustment } \\ \hline & 5,736,360 & & $ \\ \hline \end{tabular}