On January Joey Co acquired a subsidiary in Italy named Legoria Co Legoria s functional currency is the EURO which is also its the local currency LCUie the currency in which Legoria Co maintains its records in Selected exchange rates are as follows:

January FCU $

December FCU $

average FCU $

The following Trial balance for Legoria is available for

Account Balance in Euros

Cash FCU

Accounts Receivable

Allowance for doubtful accts.

Due From Joey

Inventory

Prepaid Insurance

Land

Depreciable Assets

Accumulated Depreciation

Cost of Goods Sold

Depreciation Expense

Income Tax Expense

Other Expenses

Total FCU

Accounts Payable FCU

Taxes Payable

Accrued Interest Payable

Bonds Payable

Common Stock

Retained Earnings

Sales

Total FCU

Required: Prepare a schedule translating the trial balance into the reporting currency of Joey Co to facilitate the consolidation process.

Assuming Parent Uses Equity Method, what is the Journal entry the Parent would make on its books to account for the Translation Adjustment?

Would Joey Co need to Record a Consolidation Entry to Consolidate Legoria Co on related to the Translation Adjustment.

A Yes or No

B If answer in part A is yes, describe the entry needed. If the answer is No describe why the entry is not needed.

Assume Joey Cos Subsidiary is in a Highly Inflationary economy.

A What method would Joey Co use to translate its subsidiarys trial balance?

B Where would the gain or loss be reported?