Translation of financial statements and consolidation of a foreign subsidiary (ne amortization of AAP) Assume that your company owns a subsidiary operating in Great Britain. The subsidiary maintains its books in the British pound (GBP) as its functional currency The relevant exchange rates for the $us value of the British pound (GBP) are as follows Brate $1.45 FOY rate 31. Ave rate $1.48 PPE purchase date rate 51.49 LTD borrowing date rate 51.43 Dividend te $150 Historical rate common stock and APC) 10:55 HINT: For all parts of this problem, ustancative sign with your answers to indicate a reduction 1. Translate the subsidiary's income statement statement of retained earnings balance sheet, and statement of cash flows from British pounds (GBP) into US (assume that the BOY and Earnings for the subsidiary is $2,926,035). Round answers in the "in US Dollars column to the nearest whole number Round answers in the "In US Dollars" column to the nearest whole number. Translation Rate (in GBP) in US Dollars 0$ 0 0 o 3,150,000 (1,890,000) 1,260,000 (819,000) 441,000 0 0 0 Income Statement: Sales Cost of goods sold Gross profit Operating expenses Net Income Statement of retained earnings: BOY ret. earnings Net income Dividends EOY ret. earnings Balance sheet: $ $ 0 $ 0 0 1,653,750 441,000 (44,100) 2,050,650 0 0 $ 0 Assets 0 $ 0 0 896,490 730,800 938,700 1.736,280 4,302,270 0 O 0 Cash Accounts receivable Inventory Property, plant, and equipment (PPE), net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC 0 $ 0 534,240 1,244,880 210,000 262,500 2,050,650 O O O O Ret, earnings loloooooo 4,302,270 $ Total liabilities and equity Statement of cash flows: Net Income 441,000 0 4,302,270 LA 0 0 $ 0 0 0 0 0 0 0 0 441,000 (121,800) (156,450) 89,040 251,790 (161,280) (161,280) 207,480 (44,100) 163,380 253,890 0 Total liabilities and equity Statement of cash flows: Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities Change in PPE, net Net cash from investing activities Change in long-term debt Dividends Net cash from financing activities Net change in cash Effect of exchange rate on cash Beginning cash Ending cash 0 0 0 0 0 0 0 0 0 0 0 642.600 896,490 0 $ 0 b. Compute the ending Cumulative Translation Adjustment directly, assuming a Round all answers to the nearest whole number. Direct computation of translation adjustment: Net income yo 0 b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of 102,845). What journal entry did the parent company make as a result of this computation? Round all answers to the nearest whole number Direct computation of translation adjustment . Set income or Averare exchange rate) D D a . EOV cumulative translation adatment General Journal Description Debit Credit O To record the translation autent for the year c. Following are selected financial statement accounts for the parent: Income statement: Balance sheet: Sales $13,815,000 Assets Cost of goods sold (9,670,500) Cash $1,526,569 Gross profit 4,144,500 Accounts receivable 1,768,320 Equity income 652,680 Inventory 2,680,110 Operating expenses (2,624,850) Equity investment 4,139,188 Net income $2,172,330 Property, plant, and equipment (PPE), net 14,273,658 $24,387,845 Statement of retained earnings: BOY retained earnings $11,898,000 Liabilities and stockholders' equity Net income 2,172,330 Current liabilities $1,106,582 Dividends (475,920) Long-term liabilities 750,000 Ending retained earnings $13,594,410 Common stock 1,568,535 APIC 7,291,571 Statement of accum. comp. income: Retained earnings 13,594,410 BOY cumulative translation adjustment $(102,848) Cumulative translation adjustment 76,748 Current year translation gain (loss) 179,596 $24,387,845 EOY cumulative translation adjustment $76,748 0 0 Assume the following information: The purchase price for the subsidiary included an AAP asset relating to Land that the parent estimated was worth GBP200.000 more than its book value on the subudiary's balance sheet Confirm the balance of the Equity Investment account of $4,139,188 on the parents balance sheet. Equity Investment BOY Commen stock BOY APIC BOV Betained NOV AAP DOY Cumulative translation adjustment Equity income Current translation adjustment MP Translation adjustment AOCI Balance 0 0 0 0 Owens D d. Using your translated subsidiary financial statements from Parts and the parents financial data provided in Parte, prepare the consolidation spreadsheet for the year. Sub Elimination Entries Dr Cr Consolidated 0 $ D $ 0 0 0 10 0 0 0 D 0 0 Parent Income statement: Sales 513,815,000 $ Cost of goods sold 19.670.500) GD35 profit 4 144,500 Equity income 652680 Operating expenses (2.624,8509 Net income 52,172,330 $ Statement of retained earnings: BOY retained earnings $11.9000S Net Income 2.172330 Dividends 4759201 EDY renderings S1594,4105 Statement of Accumulated Comprehensive Income: BOY.cumulative translation adjustment (12.ABS Current year translation gain doss) 172596 EDY cumulative anslation adjustment $76,741 O TE 0 $ 0 a 0 OC 0 0 0 $ 0 0 OTELS 0 0 0 0 OC 0 Balance sheet: Assets Cash Accounts receivable Inventory Equity investment $ $1,526,569 $ 1,768,320 2,680, 110 4,139,188 ooo $ o o o o 0 0 0 [E] 0 (A) Property, plant and equipment (PPE), net 14,273,658 O [A] 0 0 0 [D] 0 $24,387,8455 0 Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment Total liabilities and equity 1,106,581 750,000 1,568,535 7.291,571 13,594,410 76,748 $24,387.845 $ OOOOOOO 0 LEI 0 [E! 0 0 OOOOOOO $ 0 $ Translation of financial statements and consolidation of a foreign subsidiary (ne amortization of AAP) Assume that your company owns a subsidiary operating in Great Britain. The subsidiary maintains its books in the British pound (GBP) as its functional currency The relevant exchange rates for the $us value of the British pound (GBP) are as follows Brate $1.45 FOY rate 31. Ave rate $1.48 PPE purchase date rate 51.49 LTD borrowing date rate 51.43 Dividend te $150 Historical rate common stock and APC) 10:55 HINT: For all parts of this problem, ustancative sign with your answers to indicate a reduction 1. Translate the subsidiary's income statement statement of retained earnings balance sheet, and statement of cash flows from British pounds (GBP) into US (assume that the BOY and Earnings for the subsidiary is $2,926,035). Round answers in the "in US Dollars column to the nearest whole number Round answers in the "In US Dollars" column to the nearest whole number. Translation Rate (in GBP) in US Dollars 0$ 0 0 o 3,150,000 (1,890,000) 1,260,000 (819,000) 441,000 0 0 0 Income Statement: Sales Cost of goods sold Gross profit Operating expenses Net Income Statement of retained earnings: BOY ret. earnings Net income Dividends EOY ret. earnings Balance sheet: $ $ 0 $ 0 0 1,653,750 441,000 (44,100) 2,050,650 0 0 $ 0 Assets 0 $ 0 0 896,490 730,800 938,700 1.736,280 4,302,270 0 O 0 Cash Accounts receivable Inventory Property, plant, and equipment (PPE), net Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC 0 $ 0 534,240 1,244,880 210,000 262,500 2,050,650 O O O O Ret, earnings loloooooo 4,302,270 $ Total liabilities and equity Statement of cash flows: Net Income 441,000 0 4,302,270 LA 0 0 $ 0 0 0 0 0 0 0 0 441,000 (121,800) (156,450) 89,040 251,790 (161,280) (161,280) 207,480 (44,100) 163,380 253,890 0 Total liabilities and equity Statement of cash flows: Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities Change in PPE, net Net cash from investing activities Change in long-term debt Dividends Net cash from financing activities Net change in cash Effect of exchange rate on cash Beginning cash Ending cash 0 0 0 0 0 0 0 0 0 0 0 642.600 896,490 0 $ 0 b. Compute the ending Cumulative Translation Adjustment directly, assuming a Round all answers to the nearest whole number. Direct computation of translation adjustment: Net income yo 0 b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of 102,845). What journal entry did the parent company make as a result of this computation? Round all answers to the nearest whole number Direct computation of translation adjustment . Set income or Averare exchange rate) D D a . EOV cumulative translation adatment General Journal Description Debit Credit O To record the translation autent for the year c. Following are selected financial statement accounts for the parent: Income statement: Balance sheet: Sales $13,815,000 Assets Cost of goods sold (9,670,500) Cash $1,526,569 Gross profit 4,144,500 Accounts receivable 1,768,320 Equity income 652,680 Inventory 2,680,110 Operating expenses (2,624,850) Equity investment 4,139,188 Net income $2,172,330 Property, plant, and equipment (PPE), net 14,273,658 $24,387,845 Statement of retained earnings: BOY retained earnings $11,898,000 Liabilities and stockholders' equity Net income 2,172,330 Current liabilities $1,106,582 Dividends (475,920) Long-term liabilities 750,000 Ending retained earnings $13,594,410 Common stock 1,568,535 APIC 7,291,571 Statement of accum. comp. income: Retained earnings 13,594,410 BOY cumulative translation adjustment $(102,848) Cumulative translation adjustment 76,748 Current year translation gain (loss) 179,596 $24,387,845 EOY cumulative translation adjustment $76,748 0 0 Assume the following information: The purchase price for the subsidiary included an AAP asset relating to Land that the parent estimated was worth GBP200.000 more than its book value on the subudiary's balance sheet Confirm the balance of the Equity Investment account of $4,139,188 on the parents balance sheet. Equity Investment BOY Commen stock BOY APIC BOV Betained NOV AAP DOY Cumulative translation adjustment Equity income Current translation adjustment MP Translation adjustment AOCI Balance 0 0 0 0 Owens D d. Using your translated subsidiary financial statements from Parts and the parents financial data provided in Parte, prepare the consolidation spreadsheet for the year. Sub Elimination Entries Dr Cr Consolidated 0 $ D $ 0 0 0 10 0 0 0 D 0 0 Parent Income statement: Sales 513,815,000 $ Cost of goods sold 19.670.500) GD35 profit 4 144,500 Equity income 652680 Operating expenses (2.624,8509 Net income 52,172,330 $ Statement of retained earnings: BOY retained earnings $11.9000S Net Income 2.172330 Dividends 4759201 EDY renderings S1594,4105 Statement of Accumulated Comprehensive Income: BOY.cumulative translation adjustment (12.ABS Current year translation gain doss) 172596 EDY cumulative anslation adjustment $76,741 O TE 0 $ 0 a 0 OC 0 0 0 $ 0 0 OTELS 0 0 0 0 OC 0 Balance sheet: Assets Cash Accounts receivable Inventory Equity investment $ $1,526,569 $ 1,768,320 2,680, 110 4,139,188 ooo $ o o o o 0 0 0 [E] 0 (A) Property, plant and equipment (PPE), net 14,273,658 O [A] 0 0 0 [D] 0 $24,387,8455 0 Total assets Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment Total liabilities and equity 1,106,581 750,000 1,568,535 7.291,571 13,594,410 76,748 $24,387.845 $ OOOOOOO 0 LEI 0 [E! 0 0 OOOOOOO $ 0 $