On January 1, 20X4, Alum Corporation acquired Da Silva Company, a Brazilian subs
ID: 2582783 • Letter: O
Question
On January 1, 20X4, Alum Corporation acquired Da Silva Company, a Brazilian subsidiary, by purchasing all its common stock at book value. Da Silva's trial balances on January 1, 20X4, and December 31, 20X4, expressed in Brazilian reals (BRL), follow: January 1, 20X4 December 31, 20X4 Credit Credit Debit BRL 62,000 83,900 95,000 5,600 250,000 Debit BRL 57,700 82,000 95,000 2,400 350,000 BRL 67,500 BRL 100,000 42,000 30,000 Cash Accounts Receivable (net) Inventories Prepaid Insurance Plant & Equipment Accumulated Depreciation Intangible Assets Accounts Payable Income Taxes Payable Interest Payable Notes Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Sales Cost of Goods Sold Insurance Expense Depreciation Expense Amortization Expense Operating Expense Dividends Paid 20,000 30,000 1,000 20,000 120,000 80,000 150,000 50,000 24,000 27,000 1,100 20,000 120,000 80,000 150,000 50,000 500,000 230,000 3,200 32,500 12,000 152,300 25,000 Total BRL 538,500 BRL 538,500 BRL 1,072,100 BRL 1,072,100Explanation / Answer
a) Translation and calculation of translation adjustment
DaSilva Company
Trial Balance Translation
December 31, 20x4
Schedule A
(below)
Accmulated other comprehensive income-
Translation adjustment (debit)
NOTE: Schedule A
b.
Net assets translated at:
Accmulated other comprehensive income-Translation adjustment (debit)
Reals Exchange Rate Dollars Cash 57700 0.20 11540 Accounts Receivable (net) 82000 0.20 16400 Inventory 95000 0.20 19000 Prepaid Insurance 2400 0.20 480 Plant and equipment 350000 0.20 70000 Intangible assets 30000 0.20 6000 cost of goods sold 230000 0.25 57500 insurance expense 3200 0.25 800 depreciation expense 32500 0.25 8125 amortization expense 12000 0.25 3000 operating expense 152300 0.25 38075 dividends paid 25000Schedule A
(below)
6250 TOTAL 1072100 237170Accmulated other comprehensive income-
Translation adjustment (debit)
30250 TOTAL DEBITS 1072100 267420 Accumulated Depreciation 100000 0.20 20000 Accounts Payable 24000 0.20 4800 Income Tax Payable 27000 0.20 5400 Interest Payable 1100 0.20 220 Notes Payable 20000 0.20 4000 Bonds Payable 120000 0.20 24000 Common Stock 80000 0.30 24000 Additional Paid in capital 150000 0.30 45000 Retained earnings 50000 0.30 15000 Sales 500000 0.25 125000 TOTAL CREDITS 1072100 267420