On January 1, 2014, Placid Corporation acquired a 40% interest in Superior Industries, a Canadian Corporation, for $811,900 when Superior's stockholders' equity consisted of 1,000,000 Canadian dollars (C$) capital stock and C$500,000 retained earnings. Superior's functional currency is the Canadian dollar and the books are kept in the same currency. The exchange rate at the time of the purchase was $1.15 per Canadian dollar. Any excess allocated to patents is to be amortized over 10 years. A summary of changes in the stockholders' equity of Superior during 2014 and related exchange rates follows:
Required: Determine the following:
1. Fair value of the patent from Placid's investment in Superior on January 1, 2014 in U.S. dollars
2. Patent amortization for 2014 in U.S. dollars
3. Unamortized patent at December 31, 2014 in U.S. dollars
4. Equity adjustment from the patent in U.S. dollars
5. Income from Superior for 2014 in U.S. dollars
6. Investment in Superior balance at December 31, 2014 in U.S. dollars

Question

On January 1, 2014, Placid Corporation acquired a 40% interest in Superior Industries, a Canadian Corporation, for $811,900 when Superior's stockholders' equity consisted of 1,000,000 Canadian dollars (C$) capital stock and C$500,000 retained earnings. Superior's functional currency is the Canadian dollar and the books are kept in the same currency. The exchange rate at the time of the purchase was $1.15 per Canadian dollar. Any excess allocated to patents is to be amortized over 10 years. A summary of changes in the stockholders' equity of Superior during 2014 and related exchange rates follows:
  Required: Determine the following:
1. Fair value of the patent from Placid's investment in Superior on January 1, 2014 in U.S. dollars
2. Patent amortization for 2014 in U.S. dollars
3. Unamortized patent at December 31, 2014 in U.S. dollars
4. Equity adjustment from the patent in U.S. dollars
5. Income from Superior for 2014 in U.S. dollars
6. Investment in Superior balance at December 31, 2014 in U.S. dollars

Quizplus · Accepted Answer

The Answer of On January 1, 2014, Placid Corporation acquired a 40% interest in Superior Industries, a Canadian Corporation, for $811,900 when Superior's stockholders' equity consisted of 1,000,000 Canadian dollars (C$) capital stock and C$500,000 retained earnings. Superior's functional currency is the Canadian dollar and the books are kept in the same currency. The exchange rate at the time of the purchase was $1.15 per Canadian dollar. Any excess allocated to patents is to be amortized over 10 years. A summary of changes in the stockholders' equity of Superior during 2014 and related exchange rates follows:
  Required: Determine the following:
1. Fair value of the patent from Placid's investment in Superior on January 1, 2014 in U.S. dollars
2. Patent amortization for 2014 in U.S. dollars
3. Unamortized patent at December 31, 2014 in U.S. dollars
4. Equity adjustment from the patent in U.S. dollars
5. Income from Superior for 2014 in U.S. dollars
6. Investment in Superior balance at December 31, 2014 in U.S. dollars

On January 1, 2014, Placid Corporation Acquired a 40% Interest