# On January 1, 2012, Cayce Corporation acquired 100 percent of Simbel Company for consideration paid of $126,000, ## Question: On January 1, 2012, Cayce Corporation acquired 100 percent of Simbel Company for consideration paid of$126,000, which was equal to fair value. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the cost method. Any excess of fair value over book value is attributable to undervalued land on Simbel's books. Simbel had no retained earnings at the date of acquisition. Following are the 2013 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars ($) and Egyptian pounds (Â£E), respectively. Additional Information • During 2012, the first year of joint operation, Simbel reported income of £E 163,000 earned evenly throughout the year. Simbel paid a dividend of £E 30,000 to Cayce on June 1 of that year. Simbel also paid the 2013 dividend on June 1. • On December 9, 2013, Simbel classified a £E 10,000 expenditure as a rent expense, although this payment related to prepayment of rent for the first few months of 2014. • The exchange rates for 1 £E are as follows: January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . .$0.300

June 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.290

Weighted average rate for 2012 . . . . . . . . . . . . . . . 0.288

December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . 0.280

June 1, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.275

October 1, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.273

Weighted average rate for 2013 . . . . . . . . . . . . . . . 0.274

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . 0.270

Translate Simbel’s 2013 financial statements into U.S. dollars and prepare a consolidation worksheet for Cayce and its Egyptian subsidiary. Assume that the Egyptian pound is the subsidiary’s functional currency.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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