Phi, a U.S. firm, acquired 100 percent of Stu's outstanding stock at book value on January 1,

Question:

Phi, a U.S. firm, acquired 100 percent of Stu's outstanding stock at book value on January 1, 2016, for $112,000. Stu is a New Zealand-based company, and its functional currency is the U.S. dollar. The exchange rate for New Zealand dollars (NZ$) was $0.70 when Phi acquired its interest. Stu's stockholders' equity on January 1, 2016, consisted of NZ$150,000 capital stock and NZ$10,000 retained earnings.

The adjusted trial balance for Stu at December 31, 2016, is as follows:

Debits

Cash NZ......................................... $15,000

Accounts receivable-net ..................... 60,000

Inventories ..................................... 30,000

Prepaid expenses ............................. 10,000

Land .......................................... 45,000

Equipment .................................. 60,000

Cost of sales .................................. 120,000

Depreciation expense ...................... 12,000

Other operating expenses ................. 28,000

Dividends ................................... 20,000

NZ.............................................$400,000

Credits

Accumulated depreciation NZ............... $22,000

Accounts payable .............................. 18,000

Capital stock ................................. 150,000

Retained earnings ........................... 10,000

Sales ........................................... 200,000

NZ..............................................$400,000

ADDITIONAL INFORMATION

1. Prepaid expenses (supplies) of NZ$18,000 were on hand when Phi acquired Stu. Other operating expenses include NZ$8,000 of these supplies that were used in 2016. The remaining NZ$10,000 of supplies is on hand at year-end.

2. The NZ$120,000 cost of sales consists of NZ$50,000 inventory on hand at January 1, 2016, and NZ$100,000 in purchases during the year, less NZ$30,000 ending inventory that was acquired when the exchange rate was $0.66.

3. The NZ$60,000 of equipment consists of NZ$50,000 included in the business combination and NZ$10,000 purchased during 2016, when the exchange rate was $0.68. A depreciation rate of 20 percent is applicable to all equipment for 2016.

4. Exchange rates for 2016 are summarized as follows:

Current exchange rate, January 1, 2016 .....................$0.70

Exchange rate when new equipment was acquired ...... 0.68

Average exchange rate for 2016 ............................. 0.67

Exchange rate for December 31, 2016, inventory ........ 0.66

Exchange rate for dividends .................................. 0.66

Current exchange rate, December 31, 2016 ................. 0.65

REQUIRED:

Prepare a worksheet to remeasure the adjusted trial balance of Stu Corporation into U.S. dollars at December 31, 2016.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...