Chapter 11 Assignment
On January 1, Year 4, P Company (a Canadian company) purchased 90% of S Company (located in a foreign country) at a cost of 16,500 foreign currency units (FC).
The carrying amounts of S Company’s net assets were equal to fair values on this date except for plant and equipment, which had a fair value of FC24,000, with a remaining useful life of 10 years. A goodwill impairment loss of FC100 occurred evenly throughout Year 4.
The following exchange rates were in effect during Year 4:
|
|
|
|
Jan. 1
|
FC1
|
=
|
$1.10
|
Average for year
|
FC1
|
=
|
$1.16
|
When ending inventory purchased
|
FC1
|
=
|
$1.19
|
Dec. 31
|
FC1
|
=
|
$1.22
|
|
The statement of financial position of S Company on January 1, Year 4, is as follows:
|
S Company (FC)
|
Plant and equipment (net)
|
|
22,000
|
|
Inventory
|
|
10,000
|
|
Monetary assets (current)
|
|
12,000
|
|
|
|
44,000
|
|
Ordinary shares
|
|
10,000
|
|
Retained earnings
|
|
4,160
|
|
Bonds payable (mature in eight years)
|
|
16,000
|
|
Current liabilities
|
|
13,840
|
|
|
|
44,000
|
|
|
The December 31, Year 4, financial statements of P Company and S Company (in $) are shown below:
STATEMENT OF FINANCIAL POSITION
|
|
P Company
|
S Company
|
|
|
($)
|
|
|
Translated
|
|
Plant and equipment (net)
|
|
76,000
|
|
|
24,156
|
|
Investment in S Company (at cost)
|
|
18,150
|
|
|
—
|
|
Inventory
|
|
38,000
|
|
|
15,860
|
|
Monetary assets (current)
|
|
40,552
|
|
|
25,620
|
|
|
|
172,702
|
|
|
65,636
|
|
Ordinary shares
|
|
38,000
|
|
|
11,000
|
|
Retained earnings
|
|
53,300
|
|
|
12,572
|
|
Accumulated foreign exchange adjustments
|
|
|
|
|
2,365
|
|
Bonds payable
|
|
51,900
|
|
|
19,520
|
|
Current monetary liabilities
|
|
29,502
|
|
|
20,179
|
|
|
|
172,702
|
|
|
65,636
|
|
|
INCOME STATEMENT
|
|
P Company
|
S Company
|
|
|
($)
|
|
|
Translated
|
|
Sales
|
|
454,100
|
|
|
139,200
|
|
Dividend income
|
|
4,392
|
|
|
-
|
|
Cost of sales
|
|
(228,000
|
)
|
|
(81,780
|
)
|
Other expenses (including depreciation)
|
|
(197,000
|
)
|
|
(44,544
|
)
|
Profit
|
|
33,492
|
|
|
12,876
|
|
Other comprehensive income – unrealized exchange gain
Comprehensive income
|
|
|
|
|
2,365
15,241
|
|
|
RETAINED EARNINGS
|
|
P Company
|
S Company
|
|
|
$
|
|
|
Translated
|
|
|
|
|
|
|
Retained earnings, Jan. 1 $43,908 $4,576)
Profit 40,375 12,876
Dividends (24,100) (4,880)
Retained earnings, Dec. 31 $60,183 $12,572
|
Dividends were declared on December 31, Year 4, in the amount of $24,100 by P Company and FC4,000 by S Company. S Company’s functional currency is Foreign Currency.
Required:
Prepare the December 31, Year 4, consolidated financial statements. Include the following calculations:
1. Calculate the AD and Goodwill amounts and the translation
2. Calculate AD and Goodwill amortization and the translation
3. Calculate consolidated AOCI on foreign exchange adjustments
4. Calculate consolidated profit and amounts attributable to P Company and NCI
5. Calculate NCI amount for Balance Sheet (or SFP)