Refer to the information given in Problems P12-23 and P12-24 for Alamo and its subsidiary, Western Ranching. Assume that the Australian dollar (A$) is the functional currency and that Alamo uses the fully adjusted equity method for accounting for its
Refer to the information given in Problems P12-23 and P12-24 for Alamo and its subsidiary, Western Ranching. Assume that the Australian dollar (A$) is the functional currency and that Alamo uses the fully adjusted equity method for accounting for its investment in Western Ranching. A December 31, 20X3, trial balance for Alamo Inc. follows. Use this translated trial balance for completing this problem.
In P12-23 and P12-24
1. Western Ranching uses average cost for cost of goods sold. Inventory increased by A$20,000 during the year. Purchases were made uniformly during 20X3. The ending inventory was acquired at the average exchange rate for the year.
2. Plant and equipment were acquired as follows:
January 20X1 ........A$180,000
January 1, 20X3....... 60,000
3. Plant and equipment are depreciated using the straight-line method and a 10-year life with no residual value.
4. The payable to Alamo is in Australian dollars. Alamoâ€™s books show a receivable from Western Ranching of $6,480.
5. The 10-year bonds were issued on July 1, 20X3, for A$106,000. The premium is amortized on a straight-line basis. The interest is paid on April 1 and October 1.
6. The dividends were declared and paid on April 1.
7. Exchange rates were as follows:
January 20X1...... 1 = 0.93
August 20X1 .......1 = 0.88
January 1, 20X3 .....1 = 0.70
April 1, 20X3 .......1 = 0.67
July 1, 20X3 .........1 = 0.64
December 31, 20X3 ......1 = 0.60
20X3 average .......1 = 0.65
a. Prepare a set of elimination entries, in general journal form, for the entries required to prepare a comprehensive consolidation worksheet (including other comprehensive income) as of December 31, 20X3.
b. Prepare a comprehensive consolidation worksheet as of December 31,20X3.
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 =... 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...
Credit Accounts Receivable (net) Receivable from Western Ranching Plant & Equipment Investment in Western Ranching Cost of Goods Sold Accumulated Depreciation Interest Payable Retained Earnings, January 1, 20x3 Income from Subsidiary 179,656 $1,871072 $1,871,072
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- Tutor Answer
Basic elimination entry Common stock 63000 Retained earnings 28000 Income from Western Ranching 4565…View the full answer
A trial balance is a list of all the general ledger accounts contained in the ledger of a business. This list will contain the name of each nominal ledger account and the value of that nominal ledger balance. Each nominal ledger account will hold either a debit balance or a credit balance
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