Question

Techno Builders has acquired a 70% interest in the equity of a foreign company, Prefabco, whose functional currency is the FC. Although Prefabco began operations in June 2008 when 1 FC equaled $1.95, Techno did not acquire its interest until March 31, 2011, when 1 FC equaled $2.08. Techno paid 400,000 FC for its interest in Prefabco when the subsidiary’s condensed pre-closing trial balance was as follows:
Prefabco had net income and dividends, declared at year-end and paid in the first quarter of the next year, subsequent to Techno's acquisition as follows along with selected rates of exchange:
Required
Prepare a schedule to determine the balance in Techno’s account ‘‘Investment in Prefabco’’ as of year-end 2013 and also prepare all of the entries that would be necessary to eliminate the investment account in a worksheet to consolidate the parent company and its subsidiary for the year 2013. Techno uses the simple equity method to account for its interest in the subsidiary.


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  • CreatedApril 13, 2015
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