Home / Questions / Consolidation Worksheet after Translation Refer to the information given in Problems P12-...
Consolidation Worksheet after Translation
Refer to the information given in Problems P12-23 and P12-24 for Alamo and its subsidiary, Western Ranching. Assume that the Australian dollar (A$) is the functional currency and that Alamo uses the fully adjusted equity method for accounting for its investment in Western Ranching. A December 31, 20X3, trial balance for Alamo Inc. follows. Use this translated trial balance for completing this problem.
|
|
Debit |
Credits |
|
|
Item |
$ 38,000 |
|
|
|
Cash |
140,000 |
|
|
|
Accounts Receivable (net) |
6,480 |
|
|
|
Receivable from Western Ranching |
128,000 |
|
|
|
Inventory |
500,000 |
|
|
|
Plant & Equipment |
152,064 |
|
|
|
Investment in Western Ranching |
600,000 |
|
|
|
Cost of Goods Sold |
28,000 |
|
|
|
Depreciation Expense |
204,000 |
|
|
|
Operating Expenses |
2,000 |
|
|
|
Interest Expense |
50,000 |
|
|
|
Dividends Declared |
22,528 |
|
|
|
Translation Adjustment |
|
|
|
|
Accumulated Depreciation |
|
$ 90,000 |
|
|
Accounts Payable |
|
60,000 |
|
|
Interest Payable |
|
2,000 |
|
|
Common Stock |
|
500,000 |
|
|
Retained Earnings, January 1, 20X3 |
179,656 |
||
|
Sales |
|
1,000,000 |
|
|
Income from Subsidiary |
|
39,416 |
|
|
Total |
$1,871,072 |
$1,871,072 |
|
Required
a. Prepare a set of elimination entries, in general journal form, for the entries required to prepare a comprehensive consolidation worksheet (including other comprehensive income) as of December 1, 20X3.
b. Prepare a comprehensive consolidation worksheet as of December 31, 20X3.
P12-23,P12-24:
Additional Information
1. Western Ranching uses average cost for cost of goods sold. Inventory increased by A$20,000 during the year. Purchases were made uniformly during 20X3. The ending inventory was acquired at the average exchange rate for the year.
2. Plant and equipment were acquired as follows:
|
Date |
Cost |
|
January 20X1 |
A$180,000 |
|
January 1, 20X3 |
60,000 |
3. Plant and equipment are depreciated using the straight-line method and a 10-year life with no residual value.
4. The payable to Alamo is in Australian dollars. Alamo’s books show a receivable from Western Ranching of $6,480.
5. The 10-year bonds were issued on July 1, 20X3, for A$106,000. The premium is amortized on a straight-line basis. The interest is paid on April 1 and October 1.
6. The dividends were declared and paid on April 1.
7. Exchange rates were as follows:
|
|
A$ |
$ |
|
January 20X1 |
1 = |
0.93 |
|
August 20X1 |
1 = |
0.88 |
|
January 1, 20X3 |
1 = |
0.70 |
|
April 1, 20X3 |
1 = |
0.67 |
|
July 1, 20X3 |
1 = |
0.64 |
|
December 31, 20X3 |
1 = |
0.60 |
|
20X3 average |
1 = |
0.65 |
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