On January 2,20X8,Polaris Company acquired a 100% interest in the capital stock of Ski Company for $3,100,000.Any excess cost over book value is attributable to a patent with a 10-year remaining life.At the date of acquisition,Ski's balance sheet contained the following information:
Ski's income statement for 20X8 is as follows:
The balance sheet of Ski at December 31,20X8,is as follows:
Ski declared and paid a dividend of 20,000 FCU on October 1,20X8.Spot rates at various dates for 20X8 follow:
Assume Ski's revenues,purchases,operating expenses,depreciation expense,and income taxes were incurred evenly throughout 20X8.
-Refer to the above information.Assuming Ski's FCU is the functional currency,what is the amount of translation adjustment that appears on Polaris's consolidated financial statements at December 31,20X8?
A)$419,184 credit
B)$416,884 credit
C)$405,884 debit
D)$398,500 credit

Question

On January 2,20X8,Polaris Company acquired a 100% interest in the capital stock of Ski Company for $3,100,000.Any excess cost over book value is attributable to a patent with a 10-year remaining life.At the date of acquisition,Ski's balance sheet contained the following information:
  Ski's income statement for 20X8 is as follows:
  The balance sheet of Ski at December 31,20X8,is as follows:
  Ski declared and paid a dividend of 20,000 FCU on October 1,20X8.Spot rates at various dates for 20X8 follow:
  Assume Ski's revenues,purchases,operating expenses,depreciation expense,and income taxes were incurred evenly throughout 20X8.
-Refer to the above information.Assuming Ski's FCU is the functional currency,what is the amount of translation adjustment that appears on Polaris's consolidated financial statements at December 31,20X8?
A)$419,184 credit 
B)$416,884 credit 
C)$405,884 debit 
D)$398,500 credit

Quizplus · Accepted Answer

The translation adjustment is calculated based on the changes in exchange rates and their impact on the assets, liabilities, equity, and income statement items when consolidating a foreign subsidiary's financial statements into the parent company's financial statements. The correct choice, A, indicates a specific numerical value for the translation adjustment, suggesting it was calculated considering the changes in exchange rates and their effects on the financial statements according to the relevant accounting standards (e.g., ASC 830 in the US). This adjustment is necessary to reflect the impact of exchange rate fluctuations on the parent company's equity section of the consolidated financial statements.

On January 2,20X8,Polaris Company Acquired a 100% Interest in the Capital