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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Techno Builders has acquired a 70% interest in the equity of a foreign company, Prefabco, whose functional currency is the FC. Although Prefabco began operations in June 2008 when 1 FC equaled $1.95, Techno did not acquire its interest until March 31, 2011, when 1 FC equaled $2.08. Techno paid 400,000 FC for its interest in Prefabco when the subsidiary's condensed preclosing trial balance was as follower Debit FC Balances Current assets Depreciable assets (net). Other assets.. Cost of sales.. Other expenses. Total... 250,000 350,000 125,000 504,000 125,000 1,354,000 Last 9 months of 2011 2012. 2013. Debit FC Balances Depreciable assets (net). Other liabilities Capital stock Retained earnings Sales Total.. 240,000 305,000 420,000 Prefabco had net income and dividends, declared at year-end and paid in the first quarter of the next year, subsequent to Techno's acquisition as follows along with selected rates of exchange: Net Income Dividends Average Dollar/FC 126,000 194,000 72,000 2.10 91,500 2.25 126,000 2.34 140,000 134,000 720,000 1,314,000 Year-end Dollar/FC 2.18 2.21 2.40 Prepare a schedule to determine the balance in Techno's account "Investment in Prefabco" as of year-end 2013 and also prepare all of the entries that would be necessary to eliminate the investment account in a worksheet to consolidate the parent company and its subsidiary for the year 2013. Techno uses the simple equity method to account for its interest in the subsidiary. This question has already been posted, but the answer was incorrect.
Transcribed Image Text:Techno Builders has acquired a 70% interest in the equity of a foreign company, Prefabco, whose functional currency is the FC. Although Prefabco began operations in June 2008 when 1 FC equaled $1.95, Techno did not acquire its interest until March 31, 2011, when 1 FC equaled $2.08. Techno paid 400,000 FC for its interest in Prefabco when the subsidiary's condensed preclosing trial balance was as follower Debit FC Balances Current assets Depreciable assets (net). Other assets.. Cost of sales.. Other expenses. Total... 250,000 350,000 125,000 504,000 125,000 1,354,000 Last 9 months of 2011 2012. 2013. Debit FC Balances Depreciable assets (net). Other liabilities Capital stock Retained earnings Sales Total.. 240,000 305,000 420,000 Prefabco had net income and dividends, declared at year-end and paid in the first quarter of the next year, subsequent to Techno's acquisition as follows along with selected rates of exchange: Net Income Dividends Average Dollar/FC 126,000 194,000 72,000 2.10 91,500 2.25 126,000 2.34 140,000 134,000 720,000 1,314,000 Year-end Dollar/FC 2.18 2.21 2.40 Prepare a schedule to determine the balance in Techno's account "Investment in Prefabco" as of year-end 2013 and also prepare all of the entries that would be necessary to eliminate the investment account in a worksheet to consolidate the parent company and its subsidiary for the year 2013. Techno uses the simple equity method to account for its interest in the subsidiary. This question has already been posted, but the answer was incorrect.
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