Assume that XYZ Company purchased a 100% interest in a foreign subsidiary on 1/1/20X2. There have been no changes in the common stock since the acquisition on 1/1/20X2. The only change in buildings since acquisition has been depreciation.

• The equipment was purchased on 7/1/20X2. The subsidiary is using a 10-year life and has taken a half year of depreciation for 20X2.
• The accounts receivable were derived from sales that took place throughout 20X2.
• The note payable was issued on 1/1/20X2.
• Inventory is calculated on a FIFO basis. The ending inventory was purchased in the last quarter of 20X2. Purchases of inventory amounting to 200,000 pounds took place evenly throughout the year.
• Dividends were paid on 7/1/20X2.

The following is a list of exchange rates for British Pounds:

prepare the foreign subsidiary’s converted (in U.S. dollars) financial statements for 20X2 assuming that the Functional Currency = British Pounds.

FOREIGN SUBSIDIARY'S FINANCIAL STATEMENTS (IN U.S. $'s) FOR 20X2:
(Functional Currency = British Pounds)
COMPREHENSIVE. INCOME STATEMENT:
Net Income
OCI: Translation Gain/(Loss)
Comprehensive Income
STATEMENT OF RETAINED EARNINGS:
BALANCE SHEET
Assets:
Total Assets
Liabilities:
Owners' Equity:
Total Liabilities & Owners' Equity

prepare the foreign subsidiary’s converted (in U.S. dollars) financial statements for 20X2 assuming that the Functional Currency = U.S. Dollars

FOREIGN SUBSIDIARY'S FINANCIAL STATEMENTS (IN U.S. $'s) FOR 20X2:
(Functional Currency = U.S. Dollars)
COMPREHENSIVE. INCOME STATEMENT:
Net Income
OCI
Comprehensive Income
STATEMENT OF RETAINED EARNINGS:
RE 12/31
BALANCE SHEET
Assets:
Total Assets
Liabilities:
Owners' Equity:
Total Liabilities & Owners' Equity

Answer rating: 100% (QA)

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