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Palermo Inc. purchased 80 percent of the outstanding stock of Salina Ranching Company, located in Australia, on January 1, 20X3. The purchase price in Australian dollars (AS) was A$200,000, and A$40,000 of the differential was allocated lo plant and equipment, which is amortized over a 10-year period. The remainder of the differential was attributable to a Patent. Palermo Inc. amortizes the patent over 10 years. Salina Ranching’s
Additional Information
1. Salina 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. Plain and equipment were acquired as follows:
3. Plant and equipment are
4. The payable to Palermo is in Australian dollars. Palermo’s books show a receivable from Salina 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 arid paid on April 1.
7. Exchange rates were as follows:
Required
a. Prepare a schedule translating the December 31, 20X3, trial balance of Salina Ranching from Australian dollars to U.S. dollars.
b. Prepare a schedule providing a proof of the translation adjustment.
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Chapter 12 Solutions
Advanced Financial Accounting
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Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College