Question

Dorsey Corporation purchased 90% of the common stock of Lansing Company on January 1, 2002. The cost of the investment was equal to the book value interest acquired. Lansing Company operates two retail stores and an exporting business in London that specializes in buying and selling British tweeds. The subsidiary provided the following financial statements in pounds to the parent company:


Lansing Company was incorporated on January 1, 2000, at which time all the property, plant, and equipment was purchased. The long-term notes were issued to partially finance the purchase of the fixed assets.
Direct exchange rates for the British pound are as follows:
January 1, 2000........... $1.8996
January 1, 2002........... 1.8365
Average for the last quarter 2007... 1.5300
January 1, 2008............ 1.4919
December 31, 2008......... 1.4730
Average for 2008............ 1.4788
Average for August–December 2008... 1.4950
The January 1, 2008, retained earnings balance of Lansing in dollars was $1,593,408, and the cumulative translation adjustment was a debit balance of $939,898. The beginning inventory of £420,000 was acquired during the last quarter of 2007 and the ending inventory was acquired during the last five months of 2008. Sales were made and purchases and other expenses were incurred evenly during the year.

Required:
Translate the December 31, 2008, account balances of Lansing Company into dollars assuming that the pound is the functional currency of LansingCompany.


$1.99
Sales13
Views486
Comments0
  • CreatedMarch 13, 2015
  • Files Included
Post your question
5000