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On January 1, 20X5, Taft Company acquired all of the outstanding stock




On January 1, 20X5, Taft Company acquired all of the outstanding stock of Vikix, Inc., a Norwegian;company, at a cost of $151,200. Vikix?s net assets on the date of acquisition were 700,000;kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiary?s identifiable;assets and liabilities approximated their fair values except for property, plant, and equipment;and patents acquired. The fair value of Vikix?s property, plant, and equipment exceeded its book;value by $18,000. The remaining useful life of Vikix?s equipment at January 1, 20X5 was 10 years.;E12-15*;Problems P12-16;P12-17;Chapter 12 Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements 623;The remainder of the differential was attributable to a patent having an estimated useful life;of 5 years. Vikix?s trial balance on December 31, 20X5, in kroner, follows;Debits Credits;Cash NKr 150,000;Accounts Receivable (net) 200,000;Inventory 270,000;Property, Plant, and Equipment 600,000;Accumulated Depreciation NKr 150,000;Accounts Payable 90,000;Notes Payable 190,000;Common Stock 450,000;Retained Earnings 250,000;Sales 690,000;Cost of Goods Sold 410,000;Operating Expenses 100,000;Depreciation Expense 50,000;Dividends Paid 40,000;Total NKr1,820,000 NKr1,820,000;Additional Information;1. Vikix uses the FIFO method for its inventory. The beginning inventory was acquired on;December 31, 20X4, and ending inventory was acquired on December 15, 20X5. Purchases;of NKr420,000 were made evenly throughout 20X5.;2. Vikix acquired all of its property, plant, and equipment on July 1, 20X3, and uses straight-line;depreciation.;3. Vikix?s sales were made evenly throughout 20X5, and its operating expenses were incurred;evenly throughout 20X5.;4. The dividends were declared and paid on July 1, 20X5.;5. Taft?s income from its own operations was $275,000 for 20X5, and its total stockholders? equity;on January 1, 20X5, was $3,500,000. Taft declared $100,000 of dividends during 20X5.;6. Exchange rates were as follows;July 1, 20X3 NKr1 $.15;December 30, 20X4 NKr1 $.18;January 1, 20X5 NKr1 $.18;July 1, 20X5 NKr1 $.19;December 15, 20X5 NKr1 $.205;December 31, 20X5 NKr1 $.21;Average for 20X5 NKr1 $.20;Required;a. Prepare a schedule translating the trial balance from Norwegian kroner into U.S. dollars.;Assume the kroner is the functional currency.;b. Assume that Taft uses the basic equity method. Record all journal entries that relate to its investment;in the Norwegian subsidiary during 20X5. Provide the necessary documentation and;support for the amounts in the journal entries, including a schedule of the translation adjustment;related to the differential.;c. Prepare a schedule that determines Taft?s consolidated comprehensive income for 20X5.;d. Compute Taft?s total consolidated stockholders? equity at December 31, 20X5.;Remeasurement, Journal Entries, Consolidated Net Income;and Stockholders?


Paper#26814 | Written in 18-Jul-2015

Price : $47