These questions are advanced accounting questions related to translation of foreign currency financial statements. Please send the answers to 842498853@qq.com. Thanks for help.

These questions are advanced accounting questions related to translation of foreign currency financial statements. Please send the answers to 8..3@qq.com. Thanks for help.

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ACCT 8530
FALL 2013
TAKE-HOME PORTION – FINAL EXAMINATION
(100 points)
NAME (please print)________________________________________________
ACADEMIC INTEGRITY CERTIFICATION
I acknowledge that the answers attached to this exam are my own work. I have neither discussed these
questions or concepts related to these questions with anyone, viewed others partial or complete answers,
nor have I asked for, or given help on this assignment.
Signed:
________________________________________
Date:
__________________
INSTRUCTIONS FOR ORGANIZING YOUR SOLUTIONS AND TURNING IN THIS
ASSIGMENT
Print this exam, completing the required academic integrity certification, and attach your solution to each
problem immediately behind the associated problem. For example, page 1 (
Problem 1
) will be followed by
your solution to
Problem 1
. This will be followed by a printout of page 2 (
Problem 2
) followed by your
solution to
Problem 2
, etc. This
assignment is due at the beginning of our final exam on December 11, 2013.
PROBLEM 1
(32 points)
Fargus Corporation owned 51% of the voting common stock of Sanatee, Inc. The parent’s interest was
acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other
allocation was recorded in connection with the acquisition price.
On January 1, 2010, Sanatee sold $1,400,000 in ten-year bonds to the public at 108. The bonds pay a 10%
interest rate every December 31 and were sold to yield 8.76624%. Fargus acquired 40% of these bonds on
January 1, 2012, for 95% of the face value. Based upon this purchase price, Fargus will receive a 10.9706%
return on its investment. Both companies utilized the effective interest method of amortization. Fargus
accounts for its investment in Sanatee using the initial value method.
REQUIRED:
(1)
In good form, prepare amortization schedules through December 31, 2015 for both the parent and
subsidiary, rounding all figures to the nearest dollar.
(2)
In good form, prepare the consolidation elimination entries needed in connection with these intra-entity
bonds at December 31, 2012.
(3)
In good form, prepare the consolidation elimination entries needed in connection with these intra-entity
bonds at December 31, 2015.

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PROBLEM 2
(34 points)
Several years ago Polar Inc. acquired an 80% interest in Icecap Corp. The book values of Icecap’s asset and
liability accounts at that time were considered to be equal to their fair values. Polar’s acquisition value
corresponded to the underlying book value of Icecap so that no allocations or goodwill resulted from the
transaction. The following selected account balances are from the individual financial records of these two
companies as of December 31, 2012:
POLAR
INC.
ICECAP
CORP.
Sales
896,000
504,000
Cost of Goods Sold
406,000
276,000
Operating Expenses
210,000
147,000
Retained Earnings,
1/1/2012
1,036,000
252,000
Inventory
484,000
154,000
Land
250,000
100,000
Buildings, net
501,000
220,000
Investment Income
not given
The following transactions have occurred between Polar and Icecap. Polar accounts for its investment in
Icecap using the initial value method:
(a) Icecap sells inventory to Polar at a markup equal to 25% of cost. Intra-entity transfers were $130,000 in
2011 and $165,000 in 2012. Of this inventory, $39,000 of the 2011 transfers were retained and then sold
by Polar in 2012, while $55,000 of the 2012 transfers were held until 2013.
(b) Polar sold a building to Icecap on January 1, 2010 for $112,000, although the book value of this asset
was only $70,000 on that date. The building had a five-year remaining useful life and was to be
depreciated using the
straight-line method
with
no salvage valu
e
.
(c) Icecap sold land to Polar on January 1, 2009 for $100,000, although the book value of this asset was
only $65,000 on that date. Polar employs this land in its overall operations.
REQUIRED:
(1)
In good form, prepare the consolidation elimination entries needed in connection with transactions (a) –
(c) at December 31, 2012. Label those entries: Requirement (1a), (1b), and (1c), as corresponds to the
original transactions.
(2)
In good form, prepare a schedule showing the noncontrolling interest in the consolidated 2012 net
income.
(3)
In good form, prepare the consolidation elimination entries needed in connection with transactions (a) –
(c) at December 31, 2013. Label those entries: Requirement (3a), (3b), and (3c), as corresponds to the
original transactions.

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