Translation of financial statements and consolidation of a foreign subsidiary camortization 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 sus value of the Brazilian Real (BRL) are as follows: BOY rate $0.19 FOV rate 50.26 Avrae 90.22 PPE purchase aterate 5023 LTD borrowing duterte 3023 Dividend rate SON Historical rate common stock and APIG 50.07 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 SUS assume that the Bay Retained Earning is 1617,4001 Use a negative sign with your answers in the subsidiary on Sr column it corresponding ligte in the Subsidiary in 37 is shown in parenthesis (Examples Cost of goods sold Operating expenses Dividends and changes in accounts in the Statement of Cash Flowi) Subsidiary Translation Subsidiary (in RS) Rate (in s) 0 05 0 0 7,350,000 (4,410,000) 2,940,000 (1,911,000) 1,029,000 0 0 0 $ 0 Income statement Sales Cost of goods sold Gross profit Operating expenses Net income Statement of retained earnings BOY retained earnings Net Income Dividends Ending retained earnings Balance sheet Assets Cash Accounts receivable Inventory Property, plant, and equipment, net $617,400 0 3,858,750 1,029,000 (102,900) $ 4,784,850 0 0 5 0 0 $ 0 2,091,810 $ 1,705,200 $ 2,190,300 $ 4,051,320 $ 10,038,630 OO Oo oo 0 $ Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment 1.246,560 5 2,904,720 $ 490,000 $ 612,500 $ 4,784,850 OOOO oc OOOOO 10,038,630 $ Statement of cash flows Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities 1,029,000 $ (284,200) $ (365,050) $ 207,760 5 587,510 0$ 0 0 OOOO 0 $ 0 $ 0 0 0 Statement of cash flows Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities 1,029,000 $ (284,200) $ (365,050) $ 207,760 $ 587,510 0 0 0 $ 0 0 $ 0 $ 0 0 $ 0 (376,320) $ (376,320) 484,120 $ (102,900) $ 381,220 592,410 0 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 1,499,400 $ 2,091,810 $ 0 $ 0 b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $248,062 What journal entry did the parent company make as a result of this computation Change in rate ins) BOY News 05 D Net inco OS 0 10 Dividends 03 0 Translation adjustment for the BOY Cumulative Translation Adjustment EON Cumulative Translation Admin General Journal Description Debit Credit OODS 1 0 To record translation for the year c. Following are selected balance sheet accounts for the parent: Income statement Balance sheet Sales $30,310,000 Assets Cost of goods sold (21,217,000) Cash $7,297,685 Gross profit 9,093,000 Accounts receivable 3,879,680 Equity income 219,780 Inventory 5,880,140 Operating expenses (5,758,900) Equity investment 1,593,111 Net income $3,553,880 Property, plant, and equipment, net 31,316,292 $49,966,908 Statement of retained earnings Liabilities and stockholders' equity BOY retained earnings $23,940,718 Current liabilities $2,427,830 Net income 3,553,880 Long-term liabilities 8,750,000 Dividends {957,628) Common stock 2,053,580 Ending retained earnings $26,536,970 APIC 9,546,376 Retained earnings 26,536,970 Statement of accum. comp. income: Cumulative translation adjustment 652,152 BOY cumulative translation adjustment $248,062 $49,966,908 Current-year translation gain (loss) 404,090 EOY cumulative translation adjustment $652,152 Assume the following information: The purchase price for the subsidiary included an AAP assetre subsidiary's balance sheet. The patent is being amortized at the rate of BRL 30,000 per year and th 1. Compute the balance of the Equity Investment account of $1,593,111 on the parent's balance s Use a negative sign with answers that reduce the equity investment balance. BOY Common stock BOY APIC BOY Retained earnings BOY Unamortized AAP $ 0 0 0 Assume the following information: The purchase price for the subsidiary included an AAP asset relating to a Patent that the parent estimated was worth 300,000 more than its book value on the subsidiary's balance sheet. The patent is being amortired at the rate of BRL 30,000 per year and the BOY un amortized AAP related to the Patent is BRL270.000 1. Compute the balance of the Equity Investment account of $1.592,11 on the parents balance sheet. Use a negative sign with answers that reduce the equity investment balance. MOIY Common tok BOY APIC HOY Rebained earning BOY Unmortured AAP HOV Cumulative translation adjustment tout income Dividends Translation adjustment Der comprehensive incente Equity investment balance 51.595,11 0 0 0 O 2. Compute the equity income of $219.780 reported by the parent in its income statement. Use a negative sign with your answer. If it reduces the income Net MP fuit income spreadsheet for the year $ 0 0 0 0 0 $30,310,000 $ (21,217,000) 9,093,000 219,780 (5,758,900) $3,553,880 $ 0 0 0 [C] 0 [D] 0 0 0 0 0 0 [E] 0 $23,940,718 3,553,880 (957,628) $26,536,970 Income statement Sales Cost of goods sold Gross profit Equity income Operating expenses Net income Statement of retained earnings BOY retained earnings Net income Dividends Ending retained earnings Statement of accum. comp. Income: BOY cumulative translation adjustment Current year translation gain (loss) EOY cumulative translation adjustment Balance sheet Assets Cash Accounts receivable Inventory Equity investment Oo oo 0 0 O CD 0 $ . 0 0 $248,062 404,090 $652,152 $ 0 [E] 0 (C) 0 0 O [D] 0 $ 0 0 $7.297,685 $ 3,879,680 5,880,140 1,593,111 OOO 0 0 0 0 [C] 0 (E) 0 [A] Property, plant, and equipment, net 31,316,292 0 (A) 0 [D] 0 $49,966,908 $ 0 $ 0 Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment 0 0 O [E] 0 $2,427,830 $ 8,750,000 2,053,580 9,546,376 26,536,970 652,152 $49,966,908 $ 0 IE) 0 ooooooo 0 0 0 $ Translation of financial statements and consolidation of a foreign subsidiary camortization 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 sus value of the Brazilian Real (BRL) are as follows: BOY rate $0.19 FOV rate 50.26 Avrae 90.22 PPE purchase aterate 5023 LTD borrowing duterte 3023 Dividend rate SON Historical rate common stock and APIG 50.07 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 SUS assume that the Bay Retained Earning is 1617,4001 Use a negative sign with your answers in the subsidiary on Sr column it corresponding ligte in the Subsidiary in 37 is shown in parenthesis (Examples Cost of goods sold Operating expenses Dividends and changes in accounts in the Statement of Cash Flowi) Subsidiary Translation Subsidiary (in RS) Rate (in s) 0 05 0 0 7,350,000 (4,410,000) 2,940,000 (1,911,000) 1,029,000 0 0 0 $ 0 Income statement Sales Cost of goods sold Gross profit Operating expenses Net income Statement of retained earnings BOY retained earnings Net Income Dividends Ending retained earnings Balance sheet Assets Cash Accounts receivable Inventory Property, plant, and equipment, net $617,400 0 3,858,750 1,029,000 (102,900) $ 4,784,850 0 0 5 0 0 $ 0 2,091,810 $ 1,705,200 $ 2,190,300 $ 4,051,320 $ 10,038,630 OO Oo oo 0 $ Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment 1.246,560 5 2,904,720 $ 490,000 $ 612,500 $ 4,784,850 OOOO oc OOOOO 10,038,630 $ Statement of cash flows Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities 1,029,000 $ (284,200) $ (365,050) $ 207,760 5 587,510 0$ 0 0 OOOO 0 $ 0 $ 0 0 0 Statement of cash flows Net income Change in accounts receivable Change in inventories Change in current liabilities Net cash from operating activities 1,029,000 $ (284,200) $ (365,050) $ 207,760 $ 587,510 0 0 0 $ 0 0 $ 0 $ 0 0 $ 0 (376,320) $ (376,320) 484,120 $ (102,900) $ 381,220 592,410 0 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 1,499,400 $ 2,091,810 $ 0 $ 0 b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $248,062 What journal entry did the parent company make as a result of this computation Change in rate ins) BOY News 05 D Net inco OS 0 10 Dividends 03 0 Translation adjustment for the BOY Cumulative Translation Adjustment EON Cumulative Translation Admin General Journal Description Debit Credit OODS 1 0 To record translation for the year c. Following are selected balance sheet accounts for the parent: Income statement Balance sheet Sales $30,310,000 Assets Cost of goods sold (21,217,000) Cash $7,297,685 Gross profit 9,093,000 Accounts receivable 3,879,680 Equity income 219,780 Inventory 5,880,140 Operating expenses (5,758,900) Equity investment 1,593,111 Net income $3,553,880 Property, plant, and equipment, net 31,316,292 $49,966,908 Statement of retained earnings Liabilities and stockholders' equity BOY retained earnings $23,940,718 Current liabilities $2,427,830 Net income 3,553,880 Long-term liabilities 8,750,000 Dividends {957,628) Common stock 2,053,580 Ending retained earnings $26,536,970 APIC 9,546,376 Retained earnings 26,536,970 Statement of accum. comp. income: Cumulative translation adjustment 652,152 BOY cumulative translation adjustment $248,062 $49,966,908 Current-year translation gain (loss) 404,090 EOY cumulative translation adjustment $652,152 Assume the following information: The purchase price for the subsidiary included an AAP assetre subsidiary's balance sheet. The patent is being amortized at the rate of BRL 30,000 per year and th 1. Compute the balance of the Equity Investment account of $1,593,111 on the parent's balance s Use a negative sign with answers that reduce the equity investment balance. BOY Common stock BOY APIC BOY Retained earnings BOY Unamortized AAP $ 0 0 0 Assume the following information: The purchase price for the subsidiary included an AAP asset relating to a Patent that the parent estimated was worth 300,000 more than its book value on the subsidiary's balance sheet. The patent is being amortired at the rate of BRL 30,000 per year and the BOY un amortized AAP related to the Patent is BRL270.000 1. Compute the balance of the Equity Investment account of $1.592,11 on the parents balance sheet. Use a negative sign with answers that reduce the equity investment balance. MOIY Common tok BOY APIC HOY Rebained earning BOY Unmortured AAP HOV Cumulative translation adjustment tout income Dividends Translation adjustment Der comprehensive incente Equity investment balance 51.595,11 0 0 0 O 2. Compute the equity income of $219.780 reported by the parent in its income statement. Use a negative sign with your answer. If it reduces the income Net MP fuit income spreadsheet for the year $ 0 0 0 0 0 $30,310,000 $ (21,217,000) 9,093,000 219,780 (5,758,900) $3,553,880 $ 0 0 0 [C] 0 [D] 0 0 0 0 0 0 [E] 0 $23,940,718 3,553,880 (957,628) $26,536,970 Income statement Sales Cost of goods sold Gross profit Equity income Operating expenses Net income Statement of retained earnings BOY retained earnings Net income Dividends Ending retained earnings Statement of accum. comp. Income: BOY cumulative translation adjustment Current year translation gain (loss) EOY cumulative translation adjustment Balance sheet Assets Cash Accounts receivable Inventory Equity investment Oo oo 0 0 O CD 0 $ . 0 0 $248,062 404,090 $652,152 $ 0 [E] 0 (C) 0 0 O [D] 0 $ 0 0 $7.297,685 $ 3,879,680 5,880,140 1,593,111 OOO 0 0 0 0 [C] 0 (E) 0 [A] Property, plant, and equipment, net 31,316,292 0 (A) 0 [D] 0 $49,966,908 $ 0 $ 0 Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings Cumulative translation adjustment 0 0 O [E] 0 $2,427,830 $ 8,750,000 2,053,580 9,546,376 26,536,970 652,152 $49,966,908 $ 0 IE) 0 ooooooo 0 0 0 $