Using the Assignment Option 2 spreadsheet (linked at the bottom of this page), review the financial statements for a translation of foreign subsidiary statements for consolidation with the parent company. Required: Prepare the consolidation of foreign subsidiary to U.S. parent business combinations at its acquisition date. Follow instructions from the worksheet carefully. Use formulas to enter amounts and data. Show details of your calculations and processes. Explain each journal entry or why one was omitted. Do not hard code numbers in the Excel worksheet.

Consolidation at Acquisition Date of Foreign Subsidiary into the U.S. Parent, Push Corporation on Jan 02, 20x7

Information:

1)

Push Corporation purchased Summer British Corp on Jan 02, 20x7, for 100% control.

2)

The local currency for Summer Britain Corp is the British Pound. This is the functional currency.

3)

The British Subsidiary had revenue of $10,000. Push Corp received $10,000 Dollars with a U.S. Company when the exchange rate was $1.20 = (GBP) 1.00.

4)

Relevant Spot exchange rates ($/ GBP)

(One GBP equals the values at the time)

Date

Rate

1/2/20x7

1.3

20x7 Average

1.35

Assume that Parent (PUSH Corporation) decides to acquire 100% Subsidiary (Summer British) for $400,000. Prepare the appropriate journal entries.
Push Company Balance Sheet			Prepare the journal entries for acquiring 100% of the net assets of S (Southern TXO), accounting for it as a merger.				Prepare Elimination Entries for Stock Acquisition														Basic Eliminating Entry 01/02/20x7			Debit	Credit
Assets, Liabilities & Equities	Book Value						Account	DR	CR
Cash	$1,800,000		Account	DR	CR																Common Stock
AR	$20,000																				Paid In Capital
Inventory	$100,000																				Retained Earnings
Land	$30,000																				Good will
PP&E	$300,000																					Investment
Accumulated Depreciation	-$150,000
Patent	$0
Total Assets	$2,100,000
AP	$100,000
Common Stock ($10 par)	$500,000																1/2/20x7
Additional Paid In Capital	$700,000		Which accounting method is most appropriate for representing an investment of this type?				Balance Sheet (Consolidated)				Summer British Corp		Subsidiary US ($)		Parent		Stock Acquisition		Parent	Subsidiary	Eliminating entries		Total Consolidated Statement on 01/02/20x7
Retained Earnings	$800,000						Assets, Liabilities & Equities		Book Value		(GBP)	01/02 spot rate					DEBIT	Credit			Debit	Credit
Total Liabilities & Equity	$2,100,000									CASH	15,385	1.3	11,835		1,800,000					20,000
Subsidiary (Summer British ) Balance Sheet										AR	7,693	1.3	5,918		20,000					10,000
Assets, Liabilities & Equities	(GBP) Book Value									INV	30,770	1.3	23,669		100,000					40,000
Cash	$15,385									Land	30,770	1.3	23,669		30,000					40,000
AR	$7,693									PPE	230,769	1.3	177,515		300,000					300,000
Inventory	$30,770									ACC Depr	153,847	1.3	118,344		-150,000					-200,000
Land	$30,770									Goodwill	0	1.3	0		0					0
PP&E	$230,769		Prepare the journal entries for a 100% of S (Summer British), accounting for it using the equity method						$0	Investment	161,540	1.3	124,262		2,100,000					0
Accumulated Depreciation	-$153,847									Total					0					210,000
Patent	$0		Account	DR	CR					AP	38,462	1.3	29,586		100,000					50,000
Total Assets	$161,540									CS	38,462	1.3	29,586		500,000					50,000
AP	$38,462									PIC	38,462	1.3	29,586		700,000					50,000
Common Stock	$38,462		Prepare the journal entries for a 100% Acquisition by issuing 10,000 shares of Big Company Stock							RE	46,154	1.3	35,503		800,000					60,000
Additional Paid In Capital	$38,462									Total	161,540		124,262		2,100,000					210,000
Retained Earnings	46, 154		Account	DR	CR
Total Liabilities & Equity	$161,540
Assume that Book Value = Fair Value

Consolidation at Acquisition Date of Foreign Subsidiary into the U.S. Parent, Push Corporation on Jan 02, 20x7 Information: 2) 3 4) Push Corporation purchased Summer British Corp on Jan 02, 20x7, for 100% control. The local currency for Summer Britain Corp is the British Pound. This is the functional currency The British Subsidiary had revenue of $10,000. Push Corp received $10,000 Dollars with aU.S Company when the exchange rate was S-20 Relevant Spot exchange rates ($/ GBP) GBP 1.00. (One GBP equals the values at the time) Date 1/2/20x7 20x7 Average Rate 1.3 1.35 20x7 Aver 1.35 Consolidation at Acquisition Date of Foreign Subsidiary into the U.S. Parent, Push Corporation on Jan 02, 20x7 Information: 2) 3 4) Push Corporation purchased Summer British Corp on Jan 02, 20x7, for 100% control. The local currency for Summer Britain Corp is the British Pound. This is the functional currency The British Subsidiary had revenue of $10,000. Push Corp received $10,000 Dollars with aU.S Company when the exchange rate was S-20 Relevant Spot exchange rates ($/ GBP) GBP 1.00. (One GBP equals the values at the time) Date 1/2/20x7 20x7 Average Rate 1.3 1.35 20x7 Aver 1.35