Question

he sales proceeds from the disposition of assets Wer acquired on January 1, 2015 and 58,000 FC for the assets acquired 120,000 FC for the assets June 30, 2016. The patent amortization is tracecable to a patent that was acquired June 30, 2016, and is being amortized over 12 years by che traighs line medhod. on on Relevant exchange rates are as follows: January 1, 2015 April 30, 2016 June 30, 2016. March 31, 2017... 1 FC 2016 Average 1 FC $1.40 1 FC 1.4l 1 FC 1,38 C-$1.32 1F 135 1.34 SC 1.35 FC 1.32 FC1.31 December 31, 0 Fourth ouatter 201occt First aucer 2017 Second quarier 2012 Third quarter 2017 Fourth quarter 2017 average 1.36 1 FC 1,42 1 FC 1.35 2017 Average. 1, Given the preclosing trial balance for the vear ended 2017 as it relates to sharcholders' equity of Mofoco, calculate the remeasured U.S. dollar values. 2. Calculate the amount of 2017 consolidated net income that is traceable to the noncontrol- ling interest. Problem 11-3 (LO 3, 5) Translate a trial balance and prepare a consolidation worksheet with excess of cost over book value traceable to equipment. Due to increasing pressures to expand globally, Pueblo Corporation acquired a 100 % interest in Soren- Company, a foreign company, on January 1, 2016. Pueblo paid 12,000,000 FC, and Soren- son's equity consisted of the following: son 3,000,000 FC Common stock 2,000,000 4,200,000 Paid-in capital in excess of par Retained earnings 9,200,000 FC Total. On the date of acquisition, equipment with a 10-year life was undervalued by 500,000 FC. Any remaining excess of cost over book value is attributable to additional equipment with a 20-year life. The trial balances for Pueblo and Sorenson as of December 31, 2018, are as follows Sorenson Company Pueblo Corporation 2,840,000 FC 3,990,000 5,800,000 4,050,000 5,270,000 5,540,000 20,969,000 21,000,000 (12,560,000) (3,450,000) (10,000,000) (4,000,000) (6,500,000) 12,180,000) Cash Accounts Receivable Inventory Investment in Sorenson Fixed Assets 15,000,000 (6,800,000) 1,580,000 (5,000,000) (3,000,000) (2,000,000) 17,950,000) Accumulated Depreciation Accounts Payable Long-Term Debt Common Stock Paid-in Capital in Excess of Par Retained Earnings, January 1, 2018.

Assuming the FC is Sorenson's functional currency, prepare a consolidated worksheet.

Answer 1

Pueblo Corporation Trial Balance Translation December 31, 2018 Account Cash Accounts Receivable Inventory Fixed Assets Accumulated Depreciation Accounts Payable Long-Term Debt Common Stock Paid-In Capital in Excess of Par Retained Earnings, January 1, 2018 Sales Cost of Goods Sold Operating Expenses Cumulative Translation Adjustment Totals Balance in FC 2840000 3990000 5800000 15000000 -6800000 - 1580000 -5000000 -3000000 -2000000 -7950000 - 10000000 7500000 1200000 Relevant Balance Exchange Rate in Dollars 1.31 3720400 1.31 5226900 1.31 7598000 1.31 19650000 1.31 -8908000 1.31 -2069800 1.31 -6550000 1.2 -3600000 1.2 -2400000 Note A -9880000 1.33 - 13300000 1.33 9975000 1.33 1596000 -1058500 0 Note A-The translated balance of retained earnings is as follows: Balance on January 1, 2016 (4,200,000 FC x $1.20) 5040000 2016 Income (1,750,000 FC x $1.28) 2240000 2017 Income (2,000,000 FC * $1.30) 2600000 Total 9880000

Pueblo Corporation and Sorenson Company Worksheet for Consolidated Financial Statements (in dollars) For Year Ended December 31, 2018 Trial Balance Pueblo Sorenson Cash 4050000 3720400 Accounts Receivable 5270000 5226900 Inventory 5540000 7598000 Investment in Sorenson 20969000 Elimination & Adj Dr. Cr. Consolidated Consolidated Income Statement Balance sheet 7770400 10496900 13138000 (CY1) 1729000 15880000 3360000 (D) 655000 21000000 19650000 -12560000 -8908000 3013000 (A) 196500 451950 41305000 -21664500 2561050 -5519800 -16550000 -4000000 (EL) 3600000 Fixed Assets Accumulated Depreciation Additional Equipment Accounts Payable Long-Term Debt Common Stock-Parent Common Stock-Subsidiary Paid-In Capital in Excess of Par-Parent Paid-In Capital in Excess of Par-Subsidiary Retained Earnings, January 1, 2018-Parent Retained Earnings, January 1, 2018-Subsidiary Sales Cost of Goods Sold Operating Expenses Subsidiary Income Cumulative Translation Adjustment -6500000 -3450000 -2069800 -10000000 -6550000 -4000000 -3600000 -6500000 -2400000 -12180000 -9880000 -26000000 -13300000 16380000 9975000 3210000 1596000 -1729000 -1058500 (EL) (A) (EL) 2400000 425700 9880000 -11754300 -39300000 26355000 5025450 (A) (CY1) (A) 219450 1729000 3300 21925450 (D) -1363200 308000 21925450 Combined Net Income -7919550 7919550

Eliminations and Adjustments: (CY1) Eliminate the subsidiary income account ($1,729,000) against the investment account. (EL) Eliminate the subsidiary's January 1, 2018, equity balances against the investment account. (D) Distribute the excess of cost over book value. FC Cost to acquire subsidiary Book value of subsidiary Excess of cost over book value Less: Adjustment to equipment Additional equipment 12000000 9200000 21200000 500000 20700000 FC FC 3360000 Excess of cost over book value in dollars at: January 1, 2016 (2,800,000 FC x $1.20) December 31, 2018: Equipment (500,000 FC $1.31) Additional equipment (2,300,000 FC x $1.31) Cumulative translation adjustment 655500 3013000 308500 (A) Record appropriate depreciation of excess. Annual depreciation of excess: Equipment (500,000 FC + 10) Additional equipment (2,300,000 FC = 20) Total FC 50000 115000 165000 FC Accumulated depreciation at December 31, 2018, in dollars: Equipment (50,000 x 3 years x $1.31) 196500 Additional equipment (115,000 x 3 years x $1.31) 451950 Total 648450 Current-year depreciation at December 31, 2018, in dollars (165,000 FC x $1.33) 219450 Prior years' depreciation expense in dollars: 2016 (165,000 FC x $1.28) 2017 (165,000 FC x $1.30) Total 211200 214500 425700 Cumulative translation adjustment ($648,450 - $219,450 - $425,700) 3300

Pueblo Corporation Trial Balance Translation December 31, 2018 Account Cash Accounts Receivable Inventory Fixed Assets Accumulated Depreciation Accounts Payable Long-Term Debt Common Stock Paid-In Capital in Excess of Par Retained Earnings, January 1, 2018 Sales Cost of Goods Sold Operating Expenses Cumulative Translation Adjustment Totals Balance in FC 2840000 3990000 5800000 15000000 -6800000 - 1580000 -5000000 -3000000 -2000000 -7950000 - 10000000 7500000 1200000 Relevant Balance Exchange Rate in Dollars 1.31 3720400 1.31 5226900 1.31 7598000 1.31 19650000 1.31 -8908000 1.31 -2069800 1.31 -6550000 1.2 -3600000 1.2 -2400000 Note A -9880000 1.33 - 13300000 1.33 9975000 1.33 1596000 -1058500 0 Note A-The translated balance of retained earnings is as follows: Balance on January 1, 2016 (4,200,000 FC x $1.20) 5040000 2016 Income (1,750,000 FC x $1.28) 2240000 2017 Income (2,000,000 FC * $1.30) 2600000 Total 9880000

Consolidated Consolidated Income Statement Balance sheet 7770400 10496900 13138000 (A) Pueblo Corporation and Sorenson Company Worksheet for Consolidated Financial Statements (in dollars) For Year Ended December 31, 2018 Trial Balance Elimination & Adj Pueblo Sorenson Dr. Cr. Cash 4050000 3720400 Accounts Rece 5270000 5226900 Inventory 5540000 7598000 Investment in 20969000 1729000 (EL) 15880000 Fixed Assets 21000000 19650000 (D) 655000 (D) 3360000 Accumulated I-12560000 -8908000 Additional Equipment (D) 3013000 (A) 196500 Accounts Paya - 3450000 -2069800 451950 Long-Term De -10000000 -6550000 Common Stoc - 4000000 Common Stock-Subsidie -3600000 (EL) 3600000 Paid-In Capita -6500000 Paid-In Capital in Excess (-2400000 (EL) 2400000 Retained Earn -12180000 (A) 425700 Retained Earnings, Janua -9880000 9880000 Sales -26000000 -13300000 Cost of Goods 16380000 9975000 Operating Exp 3210000 1596000 (A) 219450 Subsidiary Inc -1729000 (CY1) 1729000 Cumulative Translation A -1058500 (A) 3300 (D) 308000 0 21925450 21925450 Combined Net Income 41305000 -21664500 2561050 -5519800 -16550000 -4000000 -6500000 (EL) -11754300 -39300000 26355000 5025450 -1363200 -7919550 7919550

Eliminations and Adjustments: (CY1) Eliminate the subsidiary income account ($1,729,000) against the investment account. (EL) Eliminate the subsidiary's January 1, 2018, equity balances against the investment account. (D) Distribute the excess of cost over book value. FC Cost to acquire subsidiary Book value of subsidiary Excess of cost over book value Less: Adjustment to equipment Additional equipment 12000000 9200000 21200000 500000 20700000 FC FC 3360000 Excess of cost over book value in dollars at: January 1, 2016 (2,800,000 FC x $1.20) December 31, 2018: Equipment (500,000 FC $1.31) Additional equipment (2,300,000 FC x $1.31) Cumulative translation adjustment 655500 3013000 308500 (A) Record appropriate depreciation of excess. Annual depreciation of excess: Equipment (500,000 FC + 10) Additional equipment (2,300,000 FC = 20) Total FC 50000 115000 165000 FC Accumulated depreciation at December 31, 2018, in dollars: Equipment (50,000 x 3 years x $1.31) 196500 Additional equipment (115,000 x 3 years x $1.31) 451950 Total 648450 Current-year depreciation at December 31, 2018, in dollars (165,000 FC x $1.33) 219450 Prior years' depreciation expense in dollars: 2016 (165,000 FC x $1.28) 2017 (165,000 FC x $1.30) Total 211200 214500 425700 Cumulative translation adjustment ($648,450 - $219,450 - $425,700) 3300