Calculation of the cumulative translation adjustment and

the allocation of #6262

Calculation of the cumulative translation adjustment and the allocation of such between
controlling and non-controlling interests. Prospect International, a U.S. company, acquired an
80% controlling interest in the equity of a foreign corporation, Aspic Developments. At the time
of the acquisition, January 1, 2014, Prospect paid 880,000 foreign currency (FC) for its interest,
which was considerably more than the proportionate amount of book value equity of the
subsidiary. The parent's cost in excess of Aspic's book value was to be allocated as
follows:Condensed financial values, expressed in FC, related to the subsidiary are as
follows:The dividends are paid in equal amounts on March 31 and September 30 of each year.
The 2015 issuance of common stock occurred on November 1, 2015, and Prospect continued
to hold an 80% interest.The subsidiary's functional currency is the FC, and relevant exchange
rates between the FC and the U.S. dollar are as follows:Required1. Calculate the cumulative
translation adjustment traceable to each year 2014 and 2015.2. Given the consolidated balance
sheet at the end of 2014 and 2015, calculate the amount of the cumulative translation
adjustment that is traceable to the controlling and non-controlling interest?View Solution:
Calculation of the cumulative translation adjustment and the allocation of

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