On January 1, 2016, Parker, Inc., a U.S.-based firm, acquired 100 percent of Suffolk PLC located in Great Britain for consideration paid of 52,000,000 British pounds (£), which was equal to fair value. The excess of fair value over book value is attributable to land (part of property, plant, and equipment) and is not subject to depreciation. Parker accounts for its investment in Suffolk at cost. On January 1, 2016, Suffolk reported the following balance sheet:
| Cash | $ 2,000,000 | Accounts payable | $ 1,000,000 |
| Accounts receivable | 3,000,000 | Long-term debt | 8,000,000 |
| Inventory | 14,000,000 | Common stock | 44,000,000 |
| Property, plant, and equipment (net) | 40,000,000 | Retained earnings | 6,000,000 |
| $59,000,000 | $59,000,000 |
On December 31, 2017, two years after the date of acquisition, Suffolk submitted the following trial balance to Parker for consolidation:
| Cash | $ 1,500,000 |
| Accounts Receivable | 5,200,000 |
| Inventory | 18,000,000 |
| Property, Plant, and Equipment (net) | 36,000,000 |
| Accounts Payable | (1,450,000) |
| Long-Term Debt | (5,000,000) |
| Common Stock | (44,000,000) |
| Retained Earnings, 1/1/17 | (8,000,000) |
| Sales | (28,000,000) |
| Cost of Goods Sold | 16,000,000 |
| Depreciation | 2,000,000 |
| Other Expenses | 6,000,000 |
| Dividends (1/30/17) | 1,750,000 |
| –0– |
| January 1 | January 30 | Average | December 31 | |
| 2016 | $1.60 | $1.61 | $1.62 | $1.64 |
| 2017 | 1.64 | 1.65 | 1.66 | 1.68 |
| Parker | |
| Sales | $ (70,000,000) |
| Cost of goods sold | 34,000,000 |
| Depreciation | 20,000,000 |
| Other expenses | 6,000,000 |
| Dividend income | (2,887,500) |
| Net income | $ (12,887,500) |
| Retained earnings, 1/1/17 | $ (48,000,000) |
| Net income, 2017 | (12,887,500) |
| Dividends, 1/30/17 | 4,500,000 |
| Retained earnings, 12/31/17 | $ (56,387,500) |
| Cash | $ 3,687,500 |
| Accounts receivable | 10,000,000 |
| Inventory | 30,000,000 |
| Investment in Suffolk | 83,200,000 |
| Plant and equipment (net) | 105,000,000 |
| Accounts payable | (25,500,000) |
| Long-term debt | (50,000,000) |
| Common stock | (100,000,000) |
| Retained earnings, 12/31/17 | (56,387,500) |
| –0– | |
Required
Use an electronic spreadsheet to complete the following four parts:
Part I. Given the relevant exchange rates presented,
Note: Worksheets should possess the following qualities:
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