Problem 5 On January 1, 2017, a US. company purchased 100% of the outstanding st
ID: 2555222 • Letter: P
Question
Problem 5 On January 1, 2017, a US. company purchased 100% of the outstanding stock of Ventana Grans, a comp any located in Latz City, New Zealand. Ventana Grains was organized on January 1, 2003. All the property, plant, and equipment held on January 1, 2017, was acquired when the company was organized. The business combination was accounted for as a purchase transaction. The 2017 financial statements for Ventana Grains, prepared in its local currency, the New Zealand dollar, are given here VENTANA GRAINS Comparative Balance Sheets January 1 and December 31, 2017 Cash and Receivables Inventories Land Buildings (net) Equipment (net) Totals Assets Jan. 1 Dec. 31 500,000 880,000 600,000 500,000 400,000 400,000 650,000 605,000 465,000 470,000 2,615,000 2,855,000 Jan. 1 Dec. 31 295,000 210,000 Short-Term Accounts and Notes Long-Term Notes (600,000 issued 9/1/2013, 80,000 issued 7/1/2017) Common Stock Additional Paid-in Capital Retained Earnings Total Liabilities and Equity 600,000 680,000 800,000 800,000 200,000 200,000 720,000 965,000 2,615,000 2,855,000 VENTANA GRAINS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2017 3,225,000 Revenues Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Less: Ending Inventory Cost of Goods Sold Gross Profit on Sales Depreciation Expense 600,000 2,100,000 2,700,000 500,000 2,200,000 1,025,000 140,000Explanation / Answer
Translation of Consolidated Income Statement :
Revenues 3225000*0.7480 = 2412300
cost of goods sold
beginning inventory 600000*0.6780 = 406800
purchased 2100000*.7480 = 1570800
goods available for sale = 1977600
ending inventory 500000*0.7476 = 373800
cost of goods sold = 1603800
gross profit on sales = 808500
depreciation
on building 45000*0.8011=36050
on equipment (01.01.17) 85000*0.8011=64088
on equipment (01.07.17) 10000*0.7412= 7412
total depreciation 107550
other expense 540000*0.7480 = 403920
net income = 297030
less : Didividend paid
01.01.2017 50000*0.7412 = 37060
31.12.2017 50000*0.7298 = 36490 73550
retained earning 223480
Translation of Balance Sheet :
Cash and Receivables (880000*0.7298) 642224 Inventories (500000*0.7476) 373800 Land (400000*0.8011) 320440 Building (605000*0.8011) 484666 Equipment on 01.01.2017 (380000*0.8011) 380001 on 01.07.2017 (90000*0.7412) 90001 Total Assets 2291131 Short term accounts and notes (210000*0.7298) 210001 Long Term Notes on 01.09.2013 (600000*0.5813) 348780 on 01.07.2017 (80000*.0.7412) 59296 Common stock (800000*0.7924) 633920 Additional Paid-in Capital (200000*0.7924) 158480 Retained Earnings On opening (720000*0.7924) 570528 in 2017 as per income 223480 Foreign Exchange Translation Gain 86646 Total Liability and Equity 2291131