On January 2,2008,Johnson Company Acquired a 100% Interest in the Capital

question 10

Multiple Choice

On January 2,2008,Johnson Company acquired a 100% interest in the capital stock of Perth 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,Perth's balance sheet contained the following information:
Perth's income statement for 2008 is as follows:
The balance sheet of Perth at December 31,2008,is as follows:
Perth declared and paid a dividend of 20,000 FCU on October 1,2008.Spot rates at various dates for 2008 follow:
Assume Perth's revenues,purchases,operating expenses,depreciation expense,and income taxes were incurred evenly throughout 2008.

-Refer to the above information.Assuming Perth's local currency is the functional currency,what is the amount of translation adjustment that appears on Johnson's consolidated financial statements at December 31,2008?

• A)$419,184 credit
• B)$416,884 credit
• C)$405,884 debit
• D)$398,500 credit

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Definitions:

Book Of Vouchers

A ledger or book that contains vouchers, which are documents or files acting as evidence for transactions.

Gross Method

A method of recording purchases of inventory at their gross price without any deduction for trade discounts at the time of purchase.

Periodic Inventory Method

An accounting approach where inventory values and cost of goods sold are determined at the end of an accounting period through physical inventory counts.

Purchases Discount

A reduction in the invoice price of goods, granted by the seller to the buyer for early payment within a specified time frame.