# Question

Translate a trial balance and prepare a consolidation worksheet with excess of cost over book value traceable to equipment. Due to increasing pressures to expand globally, Pueblo Corporation acquired a 100% interest in Sorenson Company, a foreign company, on January 1, 2016. Pueblo paid 12,000,000 FC, and Sorenson’s equity consisted of the following:
Common stock.. .. .. ... .... .. . . .. . .. .... .. .. .. . .. . . ... 3,000,000 FC
Paid-in capital in excess of par .. .. . . . .. .. .... .. ... . . .. . 2,000,000
Retained earnings ... .. . .. .. .. . . . . . .. .... .. .... . .. . . . 4,200,000
Total... . .. . . . . .. .... . .. . . . . .. ... .. .. .... .. . . . . . .. ... 9,200,000 FC
On the date of acquisition, equipment with a 10-year life was undervalued by 500,000 FC. Any remaining excess of cost over book value is attributable to additional equipment with a 20-year life.
The trial balances for Pueblo and Sorenson as of December 31, 2018, are as follows:
The investment in Sorenson consists of the following:
Initial investment (12,000,000 FC X \$1.20) .. .. . . . . . .. .. . . . \$14,400,000
2016Income (1,750,000 FC X \$1.28).. .... .. . . . . . .. . . . . ... 2,240,000
2017Income (2,000,000 FC X \$1.30).. .... .. . . . . . .. . . . . ... 2,600,000
2018Income. .. .. .. . .. .... .. .. ... .. . . . . .. . . . . . .. .... . .... 1,729,000
Total.. .. .. .... .. . .. .. .. .... ... .. . . .. . . . . . . . .. .. .. ...... \$20,969,000
Relevant exchange rates are as follows:
1FC =
January 1,2016 .... ... .. .. .. . . . . . . \$1.20
2016Average.. .... . .. .... .. . . . . . . 1.28
January 1,2017 .... ... .. .. .. . . . . . . 1.25
2017Average.. .... . .. .... .. . . . . . . 1.30
December 31,2018.. .. .. .... .. . . . . 1.31
2018Average.. .... . .. .... .. . . . . . . 1.33
Required
Assuming the FC is Sorenson’s functional currency, prepare a consolidated worksheet.

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