Fenwicke Company began operating a subsidiary in a foreign country on January 1, 2013, by acquiring all of its common stock for LCU 80,000, which was equal to fair value. This subsidiary immediately borrowed LCU 200,000 on a five-year note with 6 percent interest payable annually beginning on January 1, 2014. The subsidiary then purchased for LCU 280,000 a building that had a 10-year anticipated life and no salvage value and is to be depreciated using the straight-line method. The subsidiary rents the building for three years to a group of local doctors for LCU 7,500 per month. By year-end, payments totaling LCU 75,000 had been received. On October 1, LCU 4,400 was paid for a repair made on that date. The subsidiary transferred a cash dividend of LCU 5,900 back to Fenwicke on December 31, 2013. The functional currency for the subsidiary is the LCU. Currency exchange rates for 1 LCU follow
| |
| January 1, 2013 |
$ |
2.40 |
= |
1 LCU |
| October 1, 2013 |
|
2.25 |
= |
1 |
| Average for 2013 |
|
2.15 |
= |
1 |
| December 31, 2013 |
|
1.90 |
= |
1 |
|
Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in LCU and then translate these amounts into U.S. dollars.