Question

Exercise 13-4 On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2014 financial statements stated in Swiss francs are given below. GRANT MANAGEMENT CONSULTANTS Comparative Balance Sheets January 1 and December 31, 2014 Jan. 1 Dec. 31 Cash and Receivables 19,600 54,000 Net Property, Plant, and Equipment 40,000 36,600    Totals 59,600 90,600 Accounts and Notes Payable 30,100 32,100 Common Stock 19,900 19,900 Retained Earnings 9,600 38,600    Totals 59,600 90,600 GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2014 Revenues 74,300 Operating Expenses including Depreciation of 3,400 francs 30,200 Net Income 44,100 Dividends Declared and Paid 15,100 Increase in Retained Earnings 29,000 Direct exchange rates for Swiss franc are: Dollars per Franc January 1, 2014 $0.5987 December 31, 2014 0.5321 Average for 2014 0.5654 Dividend declaration and payment date 0.5810

(a) Translate the year-end balance sheet and income statement of the foreign subsidiary using the current rate method of translation. (Round answers to 0 decimal places, e.g. 5,125. Enter loss and debit cumulative translation adjustment using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).) Swiss Francs Translation Rate $ Consolidated Income and Retained Earnings Statement DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues $ DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues DividendsNet Income / (Loss)Net Income to Retained EarningsOperating ExpensesRetained Earnings - 1/1Retained Earnings - 12/31RevenuesTotal Cost & ExpensesTotal Revenues Balance Sheet         Total         Total

Answer 1

a) Consolidated Income and Retained Earnings Statement
for period ended Dec 31, 2014:
	Swiss Francs	translation Rate	Dollar
Revenues	74300	0.5654	42009
Less:Operating Expenses	30200	0.5654	17075
Net Income	44100		24934
Less:Dividends declared and paid	15100	0.581	8773
Add:Opening Retained Earnings	9600	0.5987	5748
Closing Retained Earnings	38600		21909
b) Balance Sheet as on Dec 31, 2014:
Assets:	Swiss Francs	translation Rate	Dollar
Cash & Receivables	54000	0.5321	28733
Property, Plant & Equipment	40000	0.5987	23948
Less: Increase in Acc.Depreciation	3400	0.5654	1922
Net PPE	36600		22026
Total Assets	90600		50759
Liabilities & Capital:	Swiss Francs	translation Rate	Dollar
Accounts and Notes payable	32100	0.5321	17080
Common Stock	19900	0.5987	11914
Retained Earnings	38600		21909
Unrealised Loss :
Cumulative Translation Adjustment			-145
Total Liabilities and Capital	90600		50759