Question

On January 1, 2016. Cayce Corporation acquired 100 percent of Simbel Company for consideration transferred with a fair value of $144,900. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its Investment in Simbel under the initial value method. Any excess of fair value of consideration transferred over book value is attributable to undervalued land on Simbel's books. Simbel had no retained earnings at the date of acquisition. Following are the 2017 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars ($) and Egyptian pounds (EE), respectively Cayce Corporation $ 235,200 (111,400) (23,400) (9,200) (27,600) 19,800 Simbel Company EE 901.300 (472,900) (82,800) (50.400) (65,600) Sales Cost of goods sold Salary expense Rent expense Other expenses Dividend income-from Simbel Gain on sale of building, 10/1/17 Net Income Retained earnings, 1/1/17 Not income Dividends Retained earnings, 12/31/17 Cash and receivables Inventory Prepaid expenses Investment in Sibel initial value) Property, plant equipment (net) Totalta Macounts payable Notes payable due in 2020 Common stock Additional paid-in capital retained earnings, 12/31/17 notal liabilities and equities 52,000 LE 281,600 EE 150, 600 291,600 (72.000) SE360,200 EE 170,200 345,400 $ 83,400 $ 340.000 83,400 (46.000) $ 377,400 $ 113,000 100, 200 30,000 144,900 468,400 S 856,500 S59.500 159, 100 142.000 98.400 377.400 $ 856,500 477,000 EE 992,600 EE 50.500 146,600 252,000 163,200 360,200 LE 992,600 < Prey 5 of 5 !!! Next >

Answer 1

5. Excess of cost over book value = 17340÷0.30= 57800€E

Page no. declucted 1. Rent Exp of floare expenditure should be bifurcated into current year expenses and forth expense from Translation of ff to $ of Retained earning on otot/ 17. LE exchange reite $ I Net Income for dolf (185.000) 10.288 Diuidend paid 6/1/16 34,400 0.290 I Retained Earning 1/1117 £ € 150, 600) $ (43,304) (59,28d 9976 - Calculation of cumulative translation ( LE to $) adjustment- E. Rate 1 I Net asset 0/01/16 (269000+ 149000) (404000) .300 (1,21900) Net income 2016 (185000) .284 153,280) Diuidend 34,400 .290 I 9976 Net assets [[554600) 1 (164504) Net assed 12/31/16 at current exchange ratio |(554600) 280 10 55288) Translation adjustment, ad7 (9216) Net assefs 01/01/17 5.54600) .280 (155,288) Net income 2017 (28160041220) (893800) .274 180501.2) Dividends 06/01/1 79,000 .275 19800 Net assets (776400)/ 11215989.2) Met asset 12/31/17 at cement (776400) .270 (209628) exchange reate 16361.2 Traslation calith, 2017 I IS577-2 cummulative Translations Aditt 4. IVAD (78600) excess of herphase price over book value clase rice least common stock (262,00 x. 30) Additional paid in capital (163200X. 30 Excess of purchase price oker book value (48960) 12340

translation adjustment= 57800(.30-0.27)=1734