Translate a trial balance and prepare a consolidation worksheet.
Useful comparison with Problem 11-9.
Same facts as Problem 11-8 except involve remeasurement. Useful comparison with Problem 11-8. Assume the same facts as Problem 11-8 with the following exceptions:
Remembering that Tobac’s functional currency is the U.S. dollar, translate Tobac’s trial balance and prepare a consolidating worksheet.
Remember that transactions traceable to pre-July 1, 2015, should be remeasured at the rate in effect on July 1, 2015. This is because on July 1, 2015, Balfour acquired its interest in Tobac and established the dollar basis of net assets existing at that time.
Balfour Corporation acquired 100% of Tobac, Inc., a foreign corporation, for 33,000,000 FC. The acquisition, which was accounted for as a purchase, occurred on July 1, 2015, when Tobac’s equity, in FC, was as follows:
Any excess of cost over book value is traceable to equipment which is to be depreciated over 10 years. Balfour uses the simple equity method to account for its investment in Tobac.
On April 1, 2017, Tobac acquired additional equipment costing 4,000,000 FC. Equipment is depreciated by the straight-line method over 10 years. No other equipment had been acquired or disposed of since 2014. Tobac employs the LIFO inventory method. Ending inventory on December 31, 2017, consists of the following:
Other expenses were incurred evenly over the year. On April 1, 2017, Tobac borrowed $1,280,000 from the parent company in order to help finance the purchase of equipment. The note is due in one year and bears interest at a rate of 8%. Principal and interest amounts are due to the parent in dollars. Various spot rates are as follows:
