Below you will find the trial balance for Parent Company and its wholly owned purchase, Subsidiary Company, as of December…

Below you will find the trial balance for Parent Company and its wholly owned purchase, Subsidiary Company, as of December 31, 2012. The financial statements are denominated in British pounds.

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  1. Subsidiary Company’s assets and liabilities are all shown at fair value except for:

a.       The fair value of Inventory is 32,000.

b.      The fair value of Depreciable Assets is 370,000.

  1. Subsidiary company sold Parent Company an item that is in Parent Company’s inventory for 10,000 and cost Subsidiary Company 5,000. The sale was made to Parent Company on credit, and no payment has been made.
  2. On December 27, 2012, Parent Company made a long-term loan to Subsidiary Company in the amount of 100,000.
  3. Subsidiary Company paid Parent Company 7,000 for Consulting Services. Subsidiary Company considers this an Administrative Expense, and Parent Company considers it Sales Revenue.
  4. Exchange rates are:

March 31, 2012, Exchange Rate:                               1 £ = $1.24
Average Rate for 2012:                                                 1 £ = $1.22
December 31, 2012, Exchange Rate:                       1 £ = $1.20

 

Company

Parent

Company

Subsidiary

Company

Accounts

Debit

Credit

Debit

Credit

Cash

£10,000

 

£4,000

 

Accounts Receivable

25,000

 

10,000

 

Inventory

30,000

 

12,000

 

Short-Term Investments

40,000

 

6,000

 

Prepaid Assets

35,000

 

12,000

 

Investment in Subsidiary

290,000

 

 

 

Long-Term Notes Receivable

150,000

 

14,000

 

Debt Service Fund

50,000

 

 

 

Depreciable Assets

900,000

 

350,000

 

Accumulated Depreciation

 

£200,000

 

£50,000

Intangible Assets

45,000

 

20,000

 

Current Liabilities

 

92,000

 

44,000

Long-Term Notes Payable

 

225,000

 

119,000

Common Stock

 

400,000

 

200,000

Retained Earnings

 

482,000

 

50,000

Sales Revenue

 

750,000

 

245,000

Cost of Goods Sold

330,000

 

160,000

 

Selling Expenses

100,000

 

45,000

 

Administrative Expenses

120,000

 

70,000

 

Interest Expenses

24,000

 

5,000

 

 

 

l submit the initial Excel model for the report that shows the consolidation entries and the final income statement and balance sheet.

 

translate the consolidated income statement and balance sheet from English pounds to U.S. dollars.

submit the final report as an attractive, polished artifact that includes all the main elements of the final product. The report should reflect the incorporation of feedback gained throughout the course.

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