On October 1, 2009, Kemper International acquired a 90% interest in the equity of Spruco Manufacturing when the subsidiary€™s equity was 8,000,000 foreign currency (FC), including retained earnings with a balance of 3,000,000 FC. Kemper paid 8,100,000 FC, when 1 FC = $1.18, for its 90% interest. The excess over book value was allocated to a patent in the amount of 360,000 FC with the balance being traceable to goodwill. It was estimated that the patent had a remaining useful life of 10 years and was to be amortized using the straight-line method.
Spruco€™s functional currency is the FC, and Kemper records its investment in the subsidiary under the simple equity method. Since its acquisition, relevant information regarding Spruco€™s net income and dividends is as follows:

On December 31, 2011, when 1 FC = $1.22, Spruco reported total assets of 13,890,000 FC and liabilities of 5,030,000 FC.
Required
Prepare the necessary entries to eliminate Kemper€™s investment in Spruco account at year-end 2011 and to record the depreciation/amortization on the relevant items of cost in excess of book value.

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Remainder of 2009 2010 2011 Net income: 350,000 $1.20 920,000 740,000 $1.25 Average exchange rate for period (1 FC) $1.30 Dividends declared 500,000 $1.25 30,000 300,000 $1.24 Exchange rate at date of declaration (1 FC $1.32