Chapter 10 Assignment
Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2011 by acquiring all of the common stock for Â§50,000 Stickles, the local currency. This subsidiary immediately borrowed Â§120,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2012. A building was then purchased for Â§170,000 on January 1, 2011. This property had a ten-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for three years to a group of local doctors for Â§6,000 per month. By year-end, payments totaling Â§60,000 had been received. On October 1, Â§5,000 were paid for a repair made on that date and it was the only transaction of this kind for the year. A cash dividend of Â§6,000 was transferred back to Ginvold on December 31, 2011. The functional currency for the subsidiary was the Stickle (Â§). Currency exchange rates were as follows:
REQUIRED: Prepare an income statement, a statement of retained earnings and a balance sheet for this subsidiary in stickles and then translate the amounts into U.S. dollars.
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