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 balance in Polaris's investment in foreign subsidiary account at December 31,2008?
A)$3,216,500
B)$3,560,000
C)$3,568,300
D)$3,577,694

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 balance in Polaris's investment in foreign subsidiary account at December 31,2008?
A)$3,216,500 
B)$3,560,000 
C)$3,568,300 
D)$3,577,694

Quizplus · Accepted Answer

The balance in Polaris's investment in the foreign subsidiary account reflects the translation of the subsidiary's financial statements into the parent company's reporting currency using the current rate method. This involves translating assets and liabilities at the current exchange rate at the balance sheet date, and equity transactions at historical rates. The correct balance, $3,568,300, likely reflects these translation adjustments accurately based on the given exchange rates and the subsidiary's financial activities throughout the year.

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