Pat purchased a 40 percent interest in Sat of Germany for $810,000 on January 1, 2011. The excess cost over book value is due to a patent with a 10-year amortization period. A summary of Sat's net assets at December 31, 2010, and at December 31, 2011, after translation into U.S. dollars, is as follows: Capital Stock Retained Earnings Equity Adjustment Net Assets December 31, 2010 $1,500,000 Net income Dividends Translation adjustment December 31, 2011 $1,500,000 $300,000 232,500 (144,000) $388,500 $1,800,000 232,500 (144,000) $159,000 159,000 $159,000 $2,047,500 Exchange rates for euros were $0.60 on January 1, 2011; $0.62 average for 2011; $0.64 when dividends were declared; and $0.65 at December 31, 2011. Sat's functional currency is the euro.

Pat purchased a 40 percent interest in Sat of Germany for $810,000 on January 1, 2011. The excess cost over book value is due to a patent with a 10-year amortization period. A summary of Sat's net assets at December 31, 2010, and at December 31, 2011, after translation into U.S. dollars, is as follows: Capital Stock Retained Earnings Equity Adjustment Net Assets December 31, 2010 $1,500,000 Net income Dividends Translation adjustment December 31, 2011 $1,500,000 $300,000 232,500 (144,000) $388,500 $1,800,000 232,500 (144,000) $159,000 159,000 $159,000 $2,047,500 Exchange rates for euros were $0.60 on January 1, 2011; $0.62 average for 2011; $0.64 when dividends were declared; and $0.65 at December 31, 2011. Sat's functional currency is the euro.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

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