Palmerstown Company - Memorandum 1 Running header...

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Memorandum 1 Running header: MEMORANDUM Memorandum for Consolidated Financial Statements Veronica Bueno Palmerstown Company
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Memorandum 2 TO: Palmerstown Company, CFO FROM: Veronica Bueno, Controller DATE: April 10, 2016 SUBJECT: Consolidated Financial Statements Palmerstown Company has established a subsidiary in a foreign country by investing 8,000,000 pounds. The company negotiated a bank loan of 4,000,000 pounds and purchased plant and equipment in the amount of 10,000,000. The company also acquired inventory for 1,000,000 pounds and additional one for 12,000,000. First in, first out method is used to determine cost of goods sold. Client’s situation Palmerstown Company has established a subsidiary and it has made several transactions that involved this subsidiary and its currency – pounds. PC invested 8,000,000 pounds when the exchange rate was $1.00 per pound on January 1. The company also negotiated a bank loan for 4,000,000 pounds on January 5 and purchased plant and equipment for 10,000,000 pounds on January 8. Plant and equipment is depreciated on a straight-line basis over a 10 years useful life. Inventory was purchased for 1,000,000 pounds on January 10 and additional one for 12,000,000 pounds was acquired during the year (three point times). First in, first out methods is used to
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