Prepare a consolidated balance sheet statement

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Reference no: EM132481334

Consolidated Financial Statements with an International Subsidiary On January 1, 2020, the Phillips Company acquired all of the outstanding shares of Standard, Ltd . a li.K. firm. for £8.000.000 in cash. At the end of 2020. the two companies presented the condensed trial balances below.

	Phillips	Standard
Cash and receivables....................................................	S 2,100,000	£ 3,000.000
Inventory...................................................................	4,000,000	3.000,000
Property, plant and equipment, net..................................	17,580.000	5.000.000
Investment in Standard.................................................	8.320,000	-
Current liabilities.........................................................	(8,000,000)	(4,000,000)
Long-tern, debt..........................................................	(4,000,000)	(1,000,000)
Capital stock..............................................................	(10,000.000)	(2.000,000)
Retained earnings, beginning.....................................	(8.000.000)	(3.500.000)
Dividends .................................................................	2,000,000	1,000,000
Sales........................................................................	(30,000,000)	(10,000,000)
Cost of goods sold .....................................................	20.000.000	6.000.000
Depreciation ..............................................................	1.000.000	500.000
Other operating expenses .............................................	5.000,000	2,000.000
Total ........................................................................	0	0

At date of acquisition. the exchange rate was S I .20/£. Standard's inventory and buildings were undervalued by £100000 and £500,000, respectively. All of the undervalued inventory was sold during the year, and the buildings are depreciated over a 20-year life. straight-line. Other relevant information is as follows:

The exchange rate at the end of 2020 was $1 30/1. The average exchange rate for 2020 was SI 25/E Goodwill impairment during 2020 was £200,000.
Phillips reports its Investment in Standard using the complete equity method. However, neither equity in net income of Standard nor Phillips' share of the translation gain for 2020 have been booked. Intercom¬pany dividends, declared when the exchange rate was S128/£, were credited to the investment account.

Required

Question 1: Assuming the pound is Standard's functional currency, prepare a consolidated balance sheet and a con-solidated statement of comprehensive income for Phillips and Standard. All supporting schedules and computations should be in good form

Reference no: EM132481334

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