Prepare a consolidation work­sheet

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Reference no: EM13734616

Please help me in solving Problem 7-8 regarding translating a trial balance and preparing a consolidation worksheet in foreign transactions. 
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Chapter 7 TRANSLATION OF FOREIGN FINANCIAL. STATEMENTS                                                                                                                                                                                                425
5.     Sold land on March 31, 20X5, with a book value on September 1, 20X4, of 100,000 euros for 200,000 euros. The gain on the sale was reported as other income, not operating income.
6.     Declared and paid annual dividends of 143,000 FC on March 31, 20X5.
Although the British company records its transactions in euros, it has been determined that its functional currency is the FC. Various exchange rates are as follows:
Direct Quote 
Euro to FC
Direct Quote 
FC to Dollar
September 1, 20X4............................................
1.40
1.17
September 30, 20X4..........................................
1.42
1.18
September 1-December 31, 20X4, average
1.44
1.19
December 31, 20X4 ..........................................
1.46
1.21
20X5 average.....................................................
1.37
1.24
1st quarter, 20X5 average ................................
1.45
1.24
March 31, 20X5      ............................
1.43
1.25
June 1, 20X5       _
1.40
1.27
June 30, 20X5..
1.39
1.26
September 1, 20X5.
1.38
1.22
September 30, 20X5..........................................
1.35
1.21
October 31, 20X5...............................................
1.34
1.23
Last quarter, 20X5 average...............................
1.32
1.24
December 31, 20X5 ...........................................
1.30
1.25
1.  Prepare a trial balance for the British company as of December 31, 20X5, expressed in its functional currency (FC). All supporting schedules should be in good form.
2.  Compute the translated (in dollars) value of cost of sales for the four-month period ending December 31, 20X4, and the year ended December 31, 20X5.
Problem 7-8 (LO 3, 5) Translate a trial balance and prepare a consolidation work­sheet. Useful comparison with Problem 7-9. 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, 20X5, when Tobac's equity, in FC, was as follows:
Common stock....................................................
19,000,000 FC
Paid-in capital in excess of par ........................
8,480,000
Retained earnings .............................................
2,520,000
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, 20X7, 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 20X4. Tobac employs the LIFO inventory method. Ending inventory on December 31, 20X7, consists of the following:
Acquired in the 1st quarter of 20X4    ...............
1,000,000 FC
Acquired in the 1st quarter of 20X5   ........................
500,000
Acquired in the 1st quarter of 20X7 ..........................
6,500,000
The cost of sales is traceable to goods purchased during 20X7 as follows:
Acquired uniformly over the last nine months  ................ 23,400,000 FC
Acquired in the 1st quarter  ............................................... 4,200,000


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Reference no: EM13734616

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