Refer to the information in Problem P12-17. Assume the U.S. dollar is the functional currency, not the krone.
In Problem P12-17
Additional Information
1. Vikix uses the FIFO method for its inventory. The beginning inventory was acquired on December 31, 20X4, and ending inventory was acquired on December 15, 20X5. Purchases of NKr 420,000 were made evenly throughout 20X5.
2. Vikix acquired all of its property, plant, and equipment on July 1, 20X3, and uses straight-line depreciation.
3. Vikix’s sales were made evenly throughout 20X5, and its operating expenses were incurred evenly throughout 20X5.
4. The dividends were declared and paid on July 1, 20X5.
5. Taft’s income from its own operations was $275,000 for 20X5, and its total stockholders’ equity on January 1, 20X5, was $3,500,000. Taft declared $100,000 of dividends during 20X5.
6. Exchange rates were as follows:
NKr $
July 1, 20X3 ......... 1 = 0.15
December 30, 20X4 ....... 1 = 0.18
January 1, 20X5 ....... 1 = 0.18
July 1, 20X5 ......... 1 = 0.19
December 15, 20X5....... 1 = 0.205
December 31, 20X5 ....... 1 = 0.21
Average for 20X5 ........ 1 = 0.20

a. Prepare a schedule remeasuring the trial balance from Norwegian kroner into U.S. dollars.
b. Assume that Taft uses the fully adjusted equity method. Record all journal entries that relate to its investment in the Norwegian subsidiary during 20X5. Provide the necessary documentation and support for the amounts in the journal entries.
c. Prepare a schedule that determines Taft’s consolidated net income for 20X5.
d. Compute Taft’s total consolidated stockholders’ equity at December 31, 20X5.

  • CreatedMay 23, 2014
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