ACCOUNTING FOR BUSINESS COMBINATION

PLEASE ANSWER THE PROBLEM AND PROVIDE STEP BY STEP EXPLANATION:

Problem 3 On January 1, 2009, P Company organized $ Company as a subsidiary in Thailand with an initial investment cost of 80,000 Baht. $ Company's December 31, 2008 trial balance in Thailand Baht is os follows: Debit Credit Cash B 7,000 Accounts Receivable (net) 20,000 Receivable from P Company 5,000 Inventory 25,000 Plant and Equipment 100,000 Accumulated Depreciation 6 10,000 Accounts Payable 12.000 Bonds Payable 50,000 Ordinary Shore 60,000 Sales 150,000 Cost of Goods Sold 70,000 Depreciation Expense 10,000 Operating Expenses 30,000 Dividends Paid 15,000 Total P 282,000 P 282,000Additional Information: I. The receivable from P Company is denominated in Thailand Baht. P Company's books show a H.000 payable to 5 Company. 2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased on November 1. 3. Equipment is depreciated by the straight line method with a H] year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1 . 4. The dividends were declared and paid on November 1. 5. Exchange rate were as follows: 1" January 1 l baht = P] .46 March I. 2009 l baht = 1.48 November I l baht = 1.54 December 31 l baht = 1.65:0 2009 average I baht = 1.50 Required: 1. Prepare a schedule translating the December 31 . EDD? trial balance from Thailand Baht to pesos. 2. Prepare a proof of the translation adjustment. 3. Where is the translation adjustment reported on F' Company's consodated nancial statements and its foregoing subsidiary