On January 1, 2011, Pan acquired all the stock of Sim of Belgium for $1,200,000, when Sim had 20,000,000 euros (Eu) capital stock and Eu 15,000,000 retained earnings. Sim’s net assets were fairly valued on this date and any cost/ book value differential is due to a patent with a 10-year amortization period. Sim’s functional currency is the euro. The exchange rates for euros for 2011 were as follows:

January 1, 2011 $.030

Average for 2011 $.032

December 31, 2011 $.035

REQUIRED

1. Calculate the patent value from the business combination on January 1, 2011.

2. Determine patent amortization in U.S. dollars for 2011.

3. Prepare a journal entry on Pan’s books to record the patent amortization for 2011.