Fenwicke company began operating a subsidiary in a foreign

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Reference no: EM13588630

Fenwicke Company began operating a subsidiary in a foreign country on January 1, 2013, by acquiring all of its common stock for LCU 80,000, which was equal to fair value. This subsidiary immediately borrowed LCU 200,000 on a five-year note with 6 percent interest payable annually beginning on January 1, 2014. The subsidiary then purchased for LCU 280,000 a building that had a 10-year anticipated life and no salvage value and is to be depreciated using the straight-line method. The subsidiary rents the building for three years to a group of local doctors for LCU 7,500 per month. By year-end, payments totaling LCU 75,000 had been received. On October 1, LCU 4,400 was paid for a repair made on that date. The subsidiary transferred a cash dividend of LCU 5,900 back to Fenwicke on December 31, 2013. The functional currency for the subsidiary is the LCU. Currency exchange rates for 1 LCU follow


January 1, 2013	$	2.40	=	1 LCU
October 1, 2013		2.25	=	1
Average for 2013		2.15	=	1
December 31, 2013		1.90	=	1

Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in LCU and then translate these amounts into U.S. dollars.

Reference no: EM13588630

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