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Category > Management Posted 09 Jan 2018 My Price 9.00

subsidiary of Par

Translation worksheet, parent accounting, consolidation

San is a 90 percent-owned foreign subsidiary of Par, acquired by Par on January 1, 2011, at book value equal to fair value, when the exchange rate for LCUs of San’s home country was $0.24. Sans functional currency is the LCU. Par made a 200,000 LCU loan to San on May 1, 2011, when the exchange rate for LCUs was $0.23. The loan is short-term and is denominated at $46,000. Adjusted trial balances of the affiliated companies at year-end 2011 are as follows:

	Par in U.S. Dollars	San in LCU
Debits
Cash	$ 25,100	150,000
Accounts receivable	90,000	180,000
Short-term loan to San	46,000	—
Inventories	110,000	230,000
Land	150,000	250,000
Buildings	300,000	600,000
Equipment	220,000	800,000
Investment in San (100%)	230,000	—
Cost of sales	400,000	200,000
Depreciation expense	81,000	100,000
Other expenses	200,000	120,000
Exchange loss	—	30,000
Dividends	100,000	100,000
Equity adjustment	44,000	—
	$1,996,100	2,760,000
Credits
Accumulated depreciation—buildings	$ 120,000	300,000
Accumulated depreciation—equipment	60,000	400,000
Accounts payable	241,100	130,000
Short-term loan from Par	—	230,000
Capital stock	500,000	800,000
Retained earnings January 1	220,000	200,000
Sales	800,000	700,000
Income from San	55,000	—
	$1,996,100	2,760,000

San paid dividends in September, when the exchange rate was $0.21. The exchange rate for LCUs was $0.20 at December 31, 2011, and the average exchange rate for 2011 was $0.22.

REQUIRED

1. Prepare a worksheet to translate San’s adjusted trial balance into U.S. dollars at December 31, 2011.

2. Prepare the necessary journal entries for Par to account for its investment in San for 2011 under the equity method.

3. Prepare consolidation working papers for Par Corporation and Subsidiary for the year ended December 31, 2011.

Answers

Maurice Tutor

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Status NEW Posted 09 Jan 2018 09:01 PM My Price 9.00

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