Plato Corporation, a U.S. company, purchases all of the outstanding stock of Socrates Company, which operates outside the U.S. on January 1, 2014. Socrates' net assets have fair values that equal their book values with the exception of land that has a fair value of 200,000 foreign currency units and equipment with a fair value of 100,000 foreign currency units. Plato paid $180,000 for this acquisition. The balance sheets for Plato and Socrates are shown below just before the business combination. Socrates' functional currency is the foreign currency unit (fcu) and the exchange rate at the date of acquisition was $.40 per fcu. Socrates uses the fcu for record-keeping purposes.
Required:
Prepare a consolidated balance sheet for Plato and subsidiary at January 1, 2014 immediately following the business combination.

Question

Plato Corporation, a U.S. company, purchases all of the outstanding stock of Socrates Company, which operates outside the U.S. on January 1, 2014. Socrates' net assets have fair values that equal their book values with the exception of land that has a fair value of 200,000 foreign currency units and equipment with a fair value of 100,000 foreign currency units. Plato paid $180,000 for this acquisition. The balance sheets for Plato and Socrates are shown below just before the business combination. Socrates' functional currency is the foreign currency unit (fcu) and the exchange rate at the date of acquisition was $.40 per fcu. Socrates uses the fcu for record-keeping purposes.
  Required:
Prepare a consolidated balance sheet for Plato and subsidiary at January 1, 2014 immediately following the business combination.

Quizplus · Accepted Answer

The Answer of Plato Corporation, a U.S. company, purchases all of the outstanding stock of Socrates Company, which operates outside the U.S. on January 1, 2014. Socrates' net assets have fair values that equal their book values with the exception of land that has a fair value of 200,000 foreign currency units and equipment with a fair value of 100,000 foreign currency units. Plato paid $180,000 for this acquisition. The balance sheets for Plato and Socrates are shown below just before the business combination. Socrates' functional currency is the foreign currency unit (fcu) and the exchange rate at the date of acquisition was $.40 per fcu. Socrates uses the fcu for record-keeping purposes.
  Required:
Prepare a consolidated balance sheet for Plato and subsidiary at January 1, 2014 immediately following the business combination.