McGovern Corporation,a U

Essay

McGovern Corporation,a U.S.company,owns a 100% interest in its subsidiary,Dukakis Limited. ,located in the United Kingdom.Dukakis began operations on January 1,2013.All revenues and expenses are received and paid in British pounds.The subsidiary maintains its accounting records in British pounds.In light of these facts,management of the U.S.parent has determined that the British pound is the functional currency of the subsidiary.
The subsidiary's balance sheet at December 31,2014,and income statement for the year then ended,are presented below in British pounds:
The following are relevant exchange rates for the year 2014:
£1 = $1.51 at the beginning of 2013,at which time the common stock
was issued.
£1 = $1.55 weighted average for 2014.
£1 = $1.58 at the date the dividends were declared and paid.
£1 = $1.53 at the end of 2014.
£1 = $1.56 at the beginning of 2014.
The balance of the cumulative translation account at January 1,2014,was $1,157.
Required:
Prepare in U.S.dollars a balance sheet at December 31,2014,and an income statement for the year then ended for Dukakis,Limited.