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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

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

Jul 09 2020 View more View Less

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