1: On December 31, 2013, Pine Company, a Canadian company, acquired 75% of the outstanding common shares of Sycamore Inc. at a cost of US$900,000. Sycamore was an American company. All of its share capital was issued on January 31, 2010, the date of its incorporation. On the acquisition date, Sycamore Inc. had outstanding common shares of US$250,000 and retained earnings of US$750,000. On that date, all of that company's assets and liabilities had fair values approximating their carrying values. Goodwill impairment of US$50,000 was recorded in 2016 and a further impairment of $25,000 in 2019. Following is the balance sheet of Sycamore Inc. as at December 31, 2019 (in US$): Sycamore Inc. Balance Sheet as at December 31, 2019 Cash Accounts receivable Inventory Equipment $ 250,000 500,000 750,000 2,750,000 $ 4,250,000 Accounts payable $ 625,000 Bonds payable 1,750,000 Common shares 250,000 1,625,000 $ 4,250,000 . . Retained earnings The accounts receivable arose from sales which occurred evenly over the month of December, 2019. Of the ending inventory, US$500,000 worth had been purchased on April 30, 2019 and the rest had been purchased on October 31, 2019. The equipment had all been purchased on May 31, 2013. All of the bonds had been issued on May 31, 2013, to finance the acquisition of the equipment. The bonds. mature on May 31, 2023. Sycamore reported net income of US$500,000 for 2019 and declared and paid dividends of US$400,000 on June 2010 Sycamore reported net income of US$500,000 for 2019 and declared and paid dividends of US$400,000 on June 30, 2019. Pine Company reported net income of Can$750,000 for 2019 and paid dividends of $500,000 on October 31, 2019. All sales, purchases and expenses were incurred more or less evenly over the year. Exchange rates for the American dollar were as follows: January 31, 2010 May 31, 2013 US$1.00 Can$1.05 US$1.00 Can$1.15 December 31, 2013 US$1.00 Can$1.18 December 31, 2018/January 1, 2019 US$1.00 Can$1.30 April 30, 2019 US$1.00 Can$1.32 June 30, 2019 US$1.00 Can$1.34 October 31, 2019 US$1.00 Can$1.36 December 31, 2019 Average for the month of December 2019 Average for 2019 US$1.00 Can$1.40 US$1.00 Can$1.39 = US$1.00 Can$1.35 a) b) d) Translate Sycamore Inc.'s statement of financial position as at December 31, 2019, if that company is considered to be an integrated foreign operation. For retained earnings, simply use the amount required to balance your balance sheet. Calculate the exchange gain or loss that would be included in Sycamore Inc.'s translated statement of comprehensive income for the year ended December 31, 2019, if that company is considered to be a self- sustaining foreign operation. Calculate the amount of consolidated net income that Pine Company would report for the year ended December 31, 2019, if Sycamore Inc. was considered to be a self-sustaining foreign operation. Consider the following independently from the previous information (except for the acquisition date and the table of exchange rates). On December 31, 2019, Sycamore Inc. sold some equipment for proceeds of US$100,000. The equipment had been acquired on May 31, 2013, and had a carrying value of US$80,000 on the date that it was sold. Calculate the gain or loss on the sale of this item, that would be reported in Sycamore Inc.'s income statement for the year ended December 31, 2019, if: i) Sycamore Inc. is considered to be an integrated foreign operation; ii) Sycamore Inc. is considered to be a self-sustaining foreign operation