Canberra Ltd, an Australian company, acquired all the issued shares of Washington Ltd, a US company, on 1 January 2014. At this date, the net assets of Washington Ltd are shown below.
| US$ | US$ | |
| Property, plant and equipment | 155 000 | |
| Accumulated depreciation | (30 000) | 125 000 |
| Cash | 10 000 | |
| Inventory | 20 000 | |
| Accounts receivable | 10 000 | |
| Total assets | 165 000 | |
| Accounts payable | 15 000 | |
| Net assets | 150 000 |
The trial balance of Washington Ltd at 31 December 2014 was:
| US$ | US$ | |
| Dr | Cr | |
| Share capital | 100 000 | |
| Retained earnings | 50 000 | |
| Accounts payable | 42 000 | |
| Sales | 90 000 | |
| Accumulated depreciation – plant and equipment | 45 000 | |
| Property, plant and equipment | 155 000 | |
| Accounts receivable | 40 000 | |
| Inventory | 45 000 | |
| Cash | 12 000 | |
| Cost of sales | 30 000 | |
| Depreciation | 15 000 | |
| Other expenses | 30 000 | |
| 327 000 | 327 000 |
Additional information
(a) No property, plant and equipment were acquired in the 2017 period.
(b) All sales and expenses were acquired evenly throughout the period. The inventories on hand at the end of the year were acquired during December 2017.
(c) Exchange rates were (A$1 = US$):
1 January 2017 0.52
31 December 2017 0.60
Average for December 2017 0.58
Average for 2017 0.56
(d) The functional currency for Washington Ltd is the US dollar.
Required
- Prepare the financial statements of Washington Ltd at 31 December 2017 in the presentation currency of Australian dollars.
- Verify the translation adjustment
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