Assume the same facts as Problem 11-8 with the following exceptions:
a. Tobac’s functional currency is the U.S. dollar.
b. Balfour’s investment in Tobac consists of the following:
Initial investment (33,000,000 FC x $0.55) . . . . . . . . . . . . . . . . . . . . . . . . . $18,150,000
Last 6 months, 2015 income (including the re-measurement gain or loss). . . 1,610,000
2016 income (including the re-measurement gain or loss) . . . . . . . . . . . . . . . 1,860,000
2017 income (excluding the re-measurement gain or loss) . . . . . . . . . . . . . . . 3,495,363
Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,115,363
The balance has not yet been adjusted for the 2017 re-measurement gain or loss.
c. The trial balances for Tobac and Balfour are the same as in Problem 11-8 with the following exceptions:
Balfour
Investment in Tobac. . . . . . . . . . . . . . . . . . . . . . . . $25,115,363
Retained earnings, January 1, 2017. . . . . . . . . . . . (5,090,000)
Subsidiary income . . . . . . . . . . . . . . . . . . . . . . . . . (3,495,363)
Required
Remembering that Tobac’s functional currency is the U.S. dollar, translate Tobac’s trial balance and prepare a consolidating worksheet. Remember that transactions traceable to pre-July 1, 2015, should be remeasured at the rate in effect on July 1, 2015. This is because on July 1, 2015, Balfour acquired its interest in Tobac and established the dollar basis of net assets existing at that time.